<u  u 


THE  LIBRARY 

OF 

THE  UNIVERSITY 

OF  CALIFORNIA 

RIVERSIDE 


GIFT  OF 

Dr.   Gordon  Watkins 


S>.  ffiatktna 


THE  NEXT  STEP 


A  Plan  for 
Economic 
World 
Federation 


By 
SCOTT     NEARING 

Author  of 
"The  American  Empire" 


Ridgcwood,  New  Jersey 

NELLIE    SEEDS    NEARING 

1922 


By  the  same  author 

WAGES  IN  THE  UNITED  STATES. 

FINANCING  THE  WAGE  EARNE?  FAMILY. 

REDUCING  THE  COST  OF  LIVING. 

ANTHRACITE. 

POVERTY  AND  RICHES. 

SOCIAL  ADJUSTMENT. 

SOCIAL  RELIGION. 

WOMEN  AND  SOCIAL  PROGRESS. 

(Collaboration  with  Nellie  Nearing) 
THE  SUPER  RACE. 
ELEMENTS  OF  ECONOMICS. 
THE  NEW  EDUCATION. 
ECONOMICS. 
COMMUNITY  Civics. 

(Collaboration  with  Jessie  Field) 
SOLUTION  OF  THE  CHILD  LABOR  PROBLEM. 
SOCIAL  SANITY. 
THE  AMERICAN  EMPIRE. 


COPYRIGHT,   1922 


AH  Eights  Reserved 


Printed   in   the    United   States  of  America 


This  book  is  dedicated  to  the 
task  of  emancipating  the  human 
race  from  economic  servitude 


"The  community  needs  service  first,  regardless  of  who 
gets  the  profits,  because  its  life  depends  on  the  service  it 
gets." 

"Organizing  for  Work." 

H.  L.  GANTT. 


"It  is  not  common  language,  literature  and  tradition  alone, 
nor  yet  clearly  defined  or  strategic  frontiers,  that  will  in  the 
future  give  stability  to  the  boundary  lines  of  Europe,  but 
rather  such  distribution  of  its  supplies  of  coal  and  iron  as 
will  prevent  any  of  the  great  nations  of  Europe  becoming 
strong  enough  to  dominate  or  absorb  all  the  others. ' ' 

"The  Economic  Basis  of  an  Enduring  Peace." 

C.  W.  MACFARLANE. 


"Men  cannot  exist  in  their  present  numbers  on  the  earth 
without  world  co-operation." 

"Our  Social  Heritage." 

GRAHAM  WALLAS. 


"The  real  way,  surely,  in  which  to  organize  the  interests  of 
producers  is  by  working  out  a  delimitation  of  industry,  and 
confiding  the  care  of  its  problems  to  those  most  concerned 
with  them.  This  is,  in  fact,  a  kind  of  federalism  in  which  the 
powers  represented  are  not  areas  but  functions." 
"Foundations  of  Sovereignty." 

H.  J.  LASKI. 


SUMMARY   OF    THE    ARGUMENT 

progress  in  proportion  as  they  are  able  to  fit  them- 
selves for  life,  and  to  fit  life  to  themselves.  Both  processes 
go  on  unceasingly. 

Recent  economic  changes  have  brought  the  remotest  parts 
of  the  world  into  close  contact  with  "civilization"  at  the 
same  time  that  they  have  increased  the  dependence  of  one 
part  of  the  world  upon  another  part.  Oddly  enough,  this 
interdependence  has  been  intensified  under  a  system  of  society 
that  deified  competition.  The  conflicts,  inevitably  resulting 
from  such  a  contradiction,  have  taken  a  terrible  toll  in  life 
and  well-being,  and  have  left  Europe  in  chaos. 

The  successful  organization  of  the  life  of  the  wrorld  is 
impossible  without  the  organization  of  its  economic  affairs. 
For  the  present  plan  of  competition  between  groups,  classes 
and  nations  there  must  be  substituted  a  means  of  co-operative 
living.  The  organization  of  a  producers  society  will  provide 
that  means.  Local  initiative  must  be  preserved ;  self-govern- 
ment in  economic  affairs  must  be  assured,  and  the  economic 
activities  of  the  world  must  be  federated  in  such  a  way  that 
all  economic  problems  of  world  concern  will  be  brought 
under  some  central  authority  which  is  representative  of  the 
various  interests  involved  at  the  same  time  that  it  controls 
the  disposition  of  economic  life.  A  world  parliament  com- 
posed of  representatives  elected  by  the  workers  in  the  various 
producing  groups  would  provide  such  a  central  authority, 
and  would  furnish  the  means  of  directing  the  economic 
experiments  of  the  race. 

Economic  emancipation  is  the  objective.  The  moans  for 
its  attainment  is  a  society  organized  in  terms  of  producers 
groups,  and  living  in  accordance  with  the  highest  known 
standards  of  intelligent  social  direction. 

7 


TABLE   OF   CONTEXTS 


CHAPTER  I  LEADINGS 


CHAPTER 


CHAPTER        IT.     THE   ECONOMIC   MCDDLE 

'2.      H'orld  Economic  Orr/auizution. 

II  I.        Et'OX'OMIC     FOUXDATIOX.S 

.IV.        ElOXOMIC     SELF-GOVEKX.MKXT 

V.     A  WORLD  PRODITKIIS'   FEDERATION". 

VI.     WOULD  ADM ix  ISTRATIOX 

3.      'Economic  Progress 
CHAPTER    YIT.    TRIAL  AND  ERROR  ix  ECONOMIC  ORGANIZATION 

YJ.II.     ECONOMIC    I, ITERATION 

WHAT  TO  BEAD.  . 


13 

28 

51 
76 

100 
119 


151 

16-i 


CHAPTER 


13 


','>.  Worlilizhij*   !']cono;:iic  Activity. 

4.  The  Pusis  of  a  Vx'orlil    [*ro<jram. 

.".  The    League   ot'    Nations    Failure. 

('.  Axioms   of    Ki'onomio    K'eor^anizarion. 


:i.  World   rrohloins. 

•1.  <  'limpet  it  inn    for    Keononiie    A'lvnn;:!'^.1. 

H.  Distribution   of  the   World's  Wealth. 

(1.  The   Livelihood   Stni-jXie. 

7.  OiKiraiiteeinLT   Livdilmod. 

S.  "Distribution  and  the  Social  Eevolution. 

9.  A   Ne\v  Order. 

10.  The  Basis  of  World  Beeon?truetion. 

9 


28 


10 


TABLE  OF  CONTENTS 


CHAPTER     III.     ECONOMIC  FOUNDATIONS 51 

1.  The  Social  Structure. 

2.  Specialization,  Association,  Co-operation. 

0.  Three  Lines  of  Economic  Organization. 

4.  Economic  Forms. 

5.  Limitations  on   Capitalism. 

6.  The  Growth  of  Capitalism. 

7.  Effective  Economic  Units. 

8.  Classes  of  Economic  Units. 

9.  The  Ideal  and  the  Real. 

CHAPTER,     IV.    ECONOMIC  SELF-GOVERNMENT 76 

1.  Maximum    Advantage. 

2.  The  Essentials  for  Maximum  Returns. 

3.  Centralized  Authority. 

4.  An  Ideal  Economic  Unit. 

5.  Rewarding  Energy. 

6.  The  Ownership  of  the  Economic  Machinery. 

7.  Economic  Leadership. 

8.  The  Selection  of  Leaders. 

9.  The  Detail  of  Organization. 

10.  The  Progress  of  Self-Government. 
CHAPTER        V.     A  WORLD  PRODUCERS'  FEDERATION 100 

1.  World  Outlook. 

2.  The   Need   of   Organization. 

','>.  Present-day  Economic   Authority. 

4.  Federation  as  a  Way  Out. 

f>.  Building  a  Producers'  Federation. 

6.  Four  Groups  of  Federations. 

7.  The  Form  of  Organization. 

8.  All  Power  to  the  Producers! 

CHAPTER      VI.    WORLD  ADMINISTRATION 119 

1.  The  Basis  for  World  Administration. 

2.  The   Field    of  World   Administration. 
?,.   Five  World   Problems. 

4.  Work   of  the  Administrative  Boards. 

5.  The  Resources  am;  Raw  Materials  Board, 
fi.   The  Transport   and  Communication  Board. 

7.  The  Exchange,   Credit  and  Investment  Board. 
S.  The  Budget  Board. 

9.  The  Adjudication   of  "Disputes  Board, 
in.   The  Detail  of  World  Administration. 


TABLE  OF  CONTENTS 

CHAPTER    VII.     TRIAL  AND  ERROR  Ix  ECONOMIC  ORGANIZATION. 

1.  Trying  Things  Out. 

2.  The  Capitalist  Experiment. 

3.  The  Cost  of  Experience. 

4.  Education. 

5.  Facing  the  Future. 

6.  Accumulating   Social   Knowledge. 

7.  Conscious  Social   Improvement. 

8.  The  Barriers  to  Progress. 

9.  Next  Steps. 

10.  The  Success  Qualities. 


11 
135 


CHAPTER  VIII.     ECONOMIC  LIBERATION 

1.  Why  Organize? 

2.  Freedom   from  Primitive  Struggle. 

3.  Freedom  from  Servility. 

4.  Wisdom  in  Consumption. 

5.  Leisure  for  Effective  Expression. 

6.  Culture  and  Human  Aspiration. 


151 


WHAT   TO  READ 164 


THE    NEXT    STEP 


I.     THE  NEW  ECONOMIC  LIFE 
1.     The  Historic  Present 

THE  knell  of  a  dying  order  is  tolling.  Its  keynote  is 
despair.  Gaunt  hunger  pulls  at  the  bell-rope,  while  dazed 
humanity  listens,  bewildered  and  afraid. 

Uncertainty  and  a  sense  of  futility  have  gripped  the  world. 
They  are  manifesting  themselves  in  unrest,  disillusionment, 
the  abandonment  of  ideals,  opportunism,  and  a  tragic  con- 
centration on  the  life  of  the  moment,  which  alone  seems  sure. 
The  future  promises  so  little  that  even  the  most  hopeful 
pause  on  its  threshold,  hesitant,  and  scarce  daring  to  penetrate 
its  mystery. 

The  war  showed  the  impotence  of  the  present  order  to 
assure  even  a  reasonable  measure  of  human  happiness  and 
well-being.  Of  what  profit  the  material  benefits  of  a  civiliza- 
tion that  takes  a  toll  of  thirty-five  millions  of  lives  and  that 
wrecks  the  economic  machinery  of  a  continent  in  four  short 
years?  Yet  the  failure  of  the  revolutionary  forces  to  avail 
themselves  of  the  opportunity  presented  by  the  war  proved 
the  unreadiness  of  the  masses  to  throw  off  the  yoke  of  the 
old  regime  and  to  lay  the  foundations  of  a  new  order.  The 
world  rulers  painted  a  picture  of  liberated  humanity  that 
led  tens  of  millions  to  fight  with  the  assurance  that  victory 
would  make  that  hope  a  reality.  The  workers  yearned  for 
the  social  revolution  and  for  the  establishment  of  the  co- 
operative commonwealth  with  its  promise  of  equality  and 
fraternity.  But  the  events  that  staggered  the  world  between 
1914  and  1920  shattered  both  ideals. 

13 


14  THE  NEXT  STEP 

Now  that  the  terrible  conflict  has  ceased,  we  pause  and 
reflect.  Millions  are  weary,  millions  are  old,  millions  are 
broken,  millions  are  disappointed,  and  the  weary  ones,  the 
old  ones,  the  broken  ones  and  the  disappointed  ones  have 
lost  their  vision  and  have  abandoned  their  faith.  Yet  life 
sweeps  on — its  unity  unimpaired,  its  continuity  unbroken, 
its  force  unchecked,  its  vigor  unabated.  Multitudes  have 
been  born  since  the  end  of  the  Great  War,  and  other  multi- 
tudes, who  were  babes  in  arms  when  the  Great  War  began, 
are  growing  into  young  manhood  and  womanhood.  The  war, 
with  its  hardships  and  its  fearful  losses,  is  history.  The 
present,  merging  endlessly  with  the  future,  makes  of  each  day 
a  tomorrow  in  which  hundreds  of  millions  of  those  who  now 
inhabit  the  earth  will  live. 

How? 

That  is  the  question  which  the  world  to-day  faces.  The 
answer  is  in  our  hands. 

2.     Economic  Needs 

Humanity  has  always  been  face  to  face  with  the  bread 
and  butter  problem  because  people  must  have  food  and  cloth- 
ing and  a  roof  over  their  heads  or  pay  the  penalty  in  physical 
suffering.  Under  the  present  world  order,  for  lack  of  these 
simple  economic  requirements,  millions  of  poverty-stricken 
workers  perish  each  year,  of  slow  starvation  and  exposure 
in  Paris,  London,  Chicago,  Tokyo ;  of  famine  in  China,  Egypt 
and  India. 

Some  issues  present  themselves  for  consideration  only 
occasionally.  The  demand  for  economic  necessaries  each  day 
recurs  with  tireless  insistence  in  the  life  of  every  individual. 
Men  have  learned  this  fact  through  frightful  experiences, 
and  they  look  forward  with  hope  or  with  dread  to  the  comfort 
of  plenty  or  to  the  disaster  of  want.  So  effectually  have  these 
forces  entered  into  everyday  life  that  they  color  all  aspects 
of  human  existence,  and  people  continually  think  and  act 


THE  NEW  ECONOMIC  LIFE  15 

in  terms  of  economic  hardship  or  of  economic  well-being. 
This  simple  fact  of  economic  determinism — the  influence  of 
the  livelihood  struggle  upon  the  conduct  of  individuals  and 
of  societies — plays  a  fateful  part  in  shaping  both  biography 
and  history. 

The  economic  issues  before  primitive  society  were  com- 
paratively simple  ones.  The  producer — the  hunter,  herder, 
farmer — snared  his  game  and  cooked  it,  tended  his  goats  and 
lived  on  their  milk  and  flesh,  planted  and  reaped  his  crops, 
and  used  them  to  sustain  life.  Later,  the  baker,  the  saddler, 
the  tailor  and  the  carpenter  spent  their  energies  in  producing 
the  articles  of  their  trade  and  in  disposing  of  them.  The 
herdsman  could  live  on  his  hills,  the  farmer  in  his  valleys 
and  the  artisans  in  their  towns,  content  and  at  peace  with 
the  remainder  of  the  world,  neither  knowing  nor  caring  what 
was  happening  to  their  fellow  dwellers  on  the  planet.  Con- 
fined within  its  narrow  bounds,  primitive  thought  was  as 
local  as  primitive  life. 

But  such  isolation  is  no  longer  possible.  The  currents 
of  economic  life,  like  most  other  phases  of  human  activity, 
have  swept  beyond  the  local  forests,  the  grass  lands,  the 
tilled  fields,  the  oven  and  the  carpenter's  bench,  and  gaining 
momentum  in  their  ever-widening  course,  they  have  circled 
the  world. 

3.     Worldizing  Economic  Activity 

The  past  hundred  years  have  witnessed  a  speedy  world- 
izing  of  human  affairs  built  upon  a  transformation  in  the 
ways  of  making  a  living.  These  changes  have  been  effected 
by  the  industrial  revolution,  which,  toward  the  end  of  the 
eighteenth  century  began  to  make  itself  felt  in  Great  Britain. 
Its  influence  spread  over  Europe,  America  and  Australia 
during  the  last  three-quarters  of  the  nineteenth  century,  but 
it  did  not  reach  Japan  until  I860.  Almost  within  the  memory 
of  the  present  generation,  therefore,  the  scope  of  trade, 


16  THE  NEXT  STEP 

manufacture  and  finance,  the  search  for  markets,  the  organi- 
zation and  unification  of  labor  and  of  popular  thinking  about 
economic  problems,  have  passed  from  a  local  into  a  world  field. 

The  inventions  and  discoveries  which  were  the  immediate 
cause  of  the  industrial  revolution  succeeded  one  another  with 
a  bewildering  rapidity  that  is  well  illustrated  in  the  case  of 
communication.  The  steamboat,  first  made  practicable  in 
1807,  and  the  locomotive,  invented  about  1815,  provided  the 
means  of  rapid  transportation  of  goods,  people  and  messages. 
The  power  press  (1814)  and  the  manufacture  of  paper  from 
wood-pulp  (begun  in  1854)  made  possible  cheap  and  abundant 
reading  matter.  The  telegraph,  invented  about  1837,  laid  the 
basis  for  instantaneous  communication.  The  first  trans- 
Atlantic  cable  (1858)  annihilated  the  water  barrier  to 
thought.  The  telephone  (187G)  and  the  wireless  (1896) 
brought  the  more  remote  parts  of  each  country  and  of  the 
world  within  easy  reach  of  the  centers  of  civilization,  while 
the  radio-phone  (1921)  enables  millions  to  sit  around  a 
common  table  for  thought,  instruction  or  enjoyment.  The 
camera  (1802)  supplemented  by  the  moving  picture  process 
(1890)  has  enabled  those  who  do  not  read  to  secure  informa- 
tion that  was  formerly  reserved  for  the  learned  and  the 
cultured.  Thus  steam,  electricity,  and  a  number  of  other 
discoveries  and  inventions  in  the  realm  of  natural  science  have 
brought  the  minds  of  the  world  in  as  close  touch  as  were  the 
inhabitants  of  a  fifteenth  century  Italian  city. 

The  effects  of  industrialism  date  only  from  history's  yes- 
terday, yet  its  results  have  already  been  momentous  and 
far-reaching.  This  is  particularly  true  of  the  close  dependence 
of  industries  upon  supplies  of  raw  materials  and  fuels,  of  the 
volume  and  the  variety  of  the  goods  produced  and  transported, 
of  the  speed  with  which  communications  are  sent,  of  the 
widened  opportunities  for  travel,  and  of  the  immense  amount 
of  information  on  the  printed  page  and  the  film  that  goes, 
each  day,  from  one  part  of  the  world  to  another. 


THE  NEW  ECONOMIC  LIFE  17 

Nature  has  not  scattered  coal,  iron,  copper  and  sugar- 
land  over  the  earth  in  the  same  lavish  way  that  she  has 
distributed  air  and  sunshine.  On  the  contrary,  the  important 
resources  from  which  industry  derives  its  raw  materials  and 
its  fuels  are  found  within  very  limited  areas  to  which  the 
remainder  of  the  world  must  go  for  the  commodities  that 
supply  its  basic  industries. 

Within  each  country  raw  materials  are  produced  at  one 
point  and  shipped  elsewhere.  Ore,  coal,  grain  and  meat- 
animals  make  up  the  bulk  of  the  freight  tonnage  in  Europe, 
in  America  and  in  Australia.  A  similar  economic  relation 
exists  between  the  various  countries,  some  of  which  produce 
far  more  than  their  proportionate  share  of  minerals  and 
fuels.  Thus,  in  1913,  the  United  States,  with  but  7  per  cent 
of  the  world's  population,  produced  36  per  cent  and  con- 
sumed 37  per  cent  of  the  world's  iron  ore  supply.  The 
figures  for  the  other  important  nations  were:  ("World  Atlas 
of  Commercial  Geology,"  Dept.  of  the  Interior,  Washington, 
1921,  p.  27) 

Per  Cent          Per   Cent 
Produced         Consumed 

Germany    20  27 

Britain 9  14 

France 12  7 

llussia ;1  5 

Belgium 0  4 

Spain   , 6  1 

Only  in  France  and  Spain  did  production  exceed  con- 
sumption. Four  of  the  remaining  countries  used  more  iron 
ore  than  they  produced,  which  meant  that  they  were  forced 
to  depend  upon  some  other  country  for  their  supply.  Belgium, 
with  her  many  industries,  imported  practically  all  of  the  iron 
ore  that  she  used. 

Coal  furnishes  an  even  more  striking  illustration  of  the 
economic  dependence  of  one  part  of  the  world  upon  another. 
The  production  and  consumption  of  coal,  for  1913,  in  millions 
of  tons,  were  as  follows : 


18  THE  NEXT  STEP 

Tons       Tons 
Produced    Consumed 

United  States 517  495 

Britain 292  217 

Germany  191  167 

France 40  60 

Italy 1  10 

Austria-Hungary It  30 

The  United  States,  Britain  and  Germany  produced,  in 
this  one  year,  121  millions  of  tons  of  coal  that  were  either 
stored  or  exported.  France,  Italy  and  Austria,  together  with 
many  of  the  smaller  industrial  countries  of  Europe  were 
forced  to  depend  upon  their  neighbors  for  coal.  In  the  case 
of  Italy,  practically  all  of  the  coal  used  was  imported. 

Again,  the  United  States  and  Spain  are  alone  among  the 
principal  countries  producing  a.  surplus  of  copper.  Out  of  a 
consumption  (1913)  of  127,000  tons,  Britain  imported  126,- 
572;  France  imported  91.437  of  the  91.486  tons  consumed, 
and  Germany,  out  of  259.300  tons  consumed,  imported  234,- 
000  tons. 

These  figures  of  the  production  and  consumption  of  iron, 
coal  and  copper  tell  the  story  of  an  economic  interdependence 
that  makes  isolated  industrial  life  virtually  impossible. 
Manufacturing  and  transport  depend  for  their  maintenance 
upon  minerals  and  fuels,  and  those  countries  that  propose  to 
manufacture  and  to  transport  must  either  produce  minerals 
themselves  or  depend  upon  some  other  country  that  does 
produce  them.  In  practice,  a  few  countries  are  enabled  to 
produce  more  of  the  minerals  and  fuels  than  they  themselves 
use,  and  to  sell  the  surplus  to  their  needy  neighbors. 

"\Vilh  the  spread  of  the  industrial  system,  this  dependence 
will  increase  rather  than  diminish  because  of  the  way  in 
which  the  reserve  supplies  of  minerals  and  fuels  are  dis- 
tributed. The  principal  deposits  of  iron,  coal,  copper  and 
petroleum  are  apparently  in  the  "Western  Hemisphere,  and 
particularly  in  North  America.  In  so  far  as  this  is 


THE  NEW  ECONOMIC  LIFE  19 

true,  the  remainder  of  the  world  will  be  compelled 
to  look  to  the  Americas  for  these  basic  commodities.  Out  of 
a  total  world  product  of  iron  ore  (1913)  of  177  millions  of 
tons,  the  United  States  produced  63  millions  (over  a  third) 
because  that  country  is  far  better  supplied  with  available 
iron  ore  deposits  than  is  any  other  country.  Since  the  war, 
France  holds  the  second  largest  deposits,  but  the  third  largest 
are  in  Newfoundland,  the  fourth  largest  in  Cuba,  and  the 
fifth  largest  in  Brazil,  whose  "enormous  deposits  are  almost 
untouched"  ("Atlas,"  p.  20).  As  for  coal,  about  three- 
fourths  of  the  world's  known  reserves  are  in  North  America. 
The  largest  known  reserves  of  copper  are  in  North  and  South 
America — those  of  Canada  and  Mexico  are  comparatively 
important ;  those  of  Chili  probably  greater  than  any  other 
country  except  the  United  States.  Petroleum  is  also  highly 
localized.  Between  1857  and  3918  the  world's  production  of 
petroleum  was  1,005  millions  of  tons.  Of  this  total,  three- 
fifths  came  from  the  United  States,  while  seventeen-twentieths 
came  from  the  United  States  and  Russia.  Indeed,  resources 
are  limited  and  localized  to  such  a  point  that  the  economic 
survival  of  many  parts  of  the  industrial  world  depends  upon 
the  continued  importation  of  raw  materials  from  other  coun- 
tries or  from  other  continents. 

This  localization  of  resources  has  resulted  in  a  corre- 
sponding localization  of  many  of  the  basic  industries.  Ger- 
many thus  became  a  manufacturing1  center  and  Argentina  a 
producer  of  food.  Necessarily  these  two  countries  exchange 
their  products,  the  Germans  eating  Argentinian  wheat  reaped 
by  German  machinery.  So  complete  has  1his  specialization 
become,  that  industrial  communities,  and  even  industrial 
countries,  like  Britain  and  Germany,  have  ceased  to  produce 
sufficient  food  for  their  maintenance,  and  have  relied,  instead, 
on  the  American,  African  and  Australian  trrain  fields.* 


*  Before  tho  war  Hivat  "Britain  imported  about  half  nf  her  food. 
"By  1020  she  wnp  importing1  about  thrc-p-quarters  nf  it.  On  the  basis 
of  the  lOli'-IOL'O  harvests.  British  wheat  sufficed  for  less  than  a  third 
of  tho  British  population.  See  "The  Fruits  of  Victory,"  Norman 
Angcll,  Glasgow.  Collins,  1021,  p.  0. 


20  THE  NEXT  STEP 

In  order  to  buy  wheat,  these  countries  must  sell  manu- 
factured goods.  In  order  to  manufacture,  they  are  compelled 
to  import  the  raw  materials  and  fuels — cotton,  copper,  rubber, 
petroleum,  coal,  iron.  The  countries  with  highly  developed 
industries  have  therefore  ceased  to  be  self-sufficient.  Their 
whole  economic  life  has  become  a  part  and  parcel  of  the  life 
of  the  world. 

This  world  interdependence  is  reflected  in  the  growth  of 
world  commerce  from  a  total  value  of  1.6-19  millions  of  dollars 
in  1820,  4,049  millions  in  1850,  and  20,105  millions  in  1900, 
to  75,311  millions  in  1919.  Meanwhile,  the  nominal  tonnage 
of  steam  and  sailing  vessels  increased  from  5.8  millions  of  tons 
in  1820  to  12.3  millions  of  tons  in  1850,  to  20.5  millions  in 
1900,  and  to  32.2  millions  in  1919. 

Resources  are  sought  after,  raw  materials  are  transported 
and  manufactured  into  usable  products,  manufactured  prod- 
ucts are  exchanged  for  food  and  raw  materials,  and  the  cycle 
is  thus  completed.  In  its  course,  all  of  the  principal  countries 
and  all  of  the  continents  are  drawn  upon  for  the  means  of 
maintaining  economic  life. 

While  the  industrial  revolution  broke  the  spell  of  isolation 
that  lay  so  heavily  upon  the  remote  parts  of  the  world,  the 
driving  power  of  the  economic  forces  that  followed  in  its 
wake,  has  battered  down  the  geographic  barriers  that  separate 
men,  almost  to  the  vanishing  point.  Peoples  work  together, 
exchange  the  products  of  their  labor,  travel,  accumulate  and 
spread  news,  broadcast  ideas  and  organize  and  co-ordinate 
business  ventures  and  labor  unions,  without  any  great  con- 
sideration for  geography,  and  despite  the  political  boundary 
lines  that  separate  nations.  A  century  of  rapid  economic 
development,  has  brought  the  world  into  a  physical  unity  the 
like  of  which  it  lias  never  before  experienced. 

Tli rough  the  ages,  human  brotherhood  has  been  the  theme 
of  philosophers  and  poets.  "Recent  economic  changes  have 
established  a  world  fellowship,  not,  to  be  sure,  of  the  kind 


THE  NEW  ECONOMIC  LIFE  21 

about  which  utopists  had  dreamed,  but  one  growing  out  of 
the  exigencies  of  world  interdependence. 

Tens  of  millions  are  to-day  co-operating  in  production  and 
exchange,  not  because  of  any  sweet  reasonableness  but  because 
the  pre-emptory  demands  of  existence  leave  them  no  choice. 
Of  necessity,  therefore,  since  tin1}'  are  in  constant  touch  with 
one  another,  they  begin  to  learn  one  another's  little  ways; 
to  inquire  into  the  personalities  of  the  "foreigners"  that 
pass  them  on  the  street,  work  with  them  elbow  to  elbow  in 
the  shops,  and  eat  with  them  at  the  same  restaurant  tables. 
This  new  brotherhood  is  an  outgrowth  of  day-to-day  relations 
in  an  industrial  community. 

Old  time  questions  were  of  a  kind  that  divided  men. 
"Are  you  a  Christian?"  "Where  were  you  born.'"  "Can 
you  speak  Spanish?"  Xo  malt  IT  how  a  man  answered  these 
questions  he  got  himself  into  difficulty.  If  he  was  a  Christian, 
lie  found  two-thirds  of  the  world  confronting  him  with 
different  religious  beliefs.  If  hi1  was  born  in  France,  he  was 
compelled  to  assume  all  of  the  enmities,  1ml  reds  and  antago- 
nisms felt  by  Frenchmen  for  Iheir  rivals.  If  lie  spoke  any- 
thing except  Spanish,  he  was  a  "foreigner"  in  Spain.  The 
old  world  was  a  separatist  world,  lined  with  walls,  fences, 
boundary  stakes  and  frontiers. 

Modern  questions  bring  men  into  touch  with  one  another. 
"Can  yon  repair  a  locomotive?"  "Do  yon  understand  coal 
mining?"  "Can.  you  carry  us  safely  to  .Japan?"  "Will 
you  lake  shoes  in  exchange  for  petroleum?"  "Arc  yon  able 
to  get  along  with  people?"  "Have  you  any  surplus  wheat?" 
"How  do  yon  suppose  we  can  get  rid  of  the  boll-weevil?" 
"Let  us  show  you  a  new  style  tractor."  If  a  man  can  repair 
an  engine,  he  is  wanted  in  an  engine  shop.  If  he  can  dig  coal, 
lie  is  needed  in  a  coal  mine.  If  he  has  shoes  to  exchange  for 
fuel,  lie  find 


22  THE  NEXT  STEP 

•working  together,  living  together,  thinking  together;  and  a 
test  of  man's  capacity  to  take  part  in  its  activities  lies  in 
his  ability  to  be  an  effective,  co-operating  member  of  a  world 
group. 

4.     The  Basis  of  a  World  Program 

"With  economic  life  established  on  a  world  scale,  it  is 
inevitable  that  the  range  of  men's  thoughts  and  the  lines  of 
their  social  groupings  should  assume  the  same  general  scope. 
The  late  war  made  it  quite  apparent  that  war  means  world 
war,  and  that  a  real  peace  is  impossible  unless  it  is  a  world 
peace.  The  post-war  experience  has  shown  with  equal  clear- 
ness, that  prosperity  means  world  prosperity,  and  that  it  is 
impossible  to  destroy  the  economic  well-being  of  an  integral 
part  of  the  world  without  destroying  the  well-being  of  the 
whole  world.  These  things  were  suspected  before  the  war, 
when  they  formed  the  themes  of  moral  dissertations  and 
scholarly  essays,  of  syndicalist  pamphlets,  socialist  programs 
and  revolutionary  appeals.  But  it  required  the  hard  knocks 
of  the  past  eight  years  to  lift  them  so  far  out  of  the  realm  of 
theory  into  that  of  reality,  that  an 3-  thinking  human  being 
who  faces  the  facts  must  admit  their  truth.* 

The  economics  of  the  modern  world  make  it  inevitable 
that  thinkers  on  public  questions,  particularly  on  economic 
questions,  should  frame  their  thoughts  in  world  terms,  and 
that  the  practical  plans  for  the  organization  and  direction  of 
human  affairs  should  be  built  around  an  idea  which  includes 
these  three  elements : 


*  The  Manchester  Guardian  Commercial,  Supplement  for  April  20, 
1922,  pape  TV.  carries  an  advertisement  signed  by  Sir  Charles  W. 
M.acara,  Chairman  and  Manapinp  Director  of  Henry  Bannerman  and 
Sons,  T-itd.,  Chairman  of  the  Manchester  Cotton  Employers  Association, 
etc.,  which  contains  a  very  forceful  presentation  of  this  point.  "It  is 
Impossible  for  any  country  to  expect  to  win  economic  success  at  tho 

expense-   or   in    total    indifference    to    the    success    of   others The 

pood  of  one  country  is  bound  up  with  the  pood  of  another,  and  it  is 
only  by  studying,  what  will  bo  mutually  advantageous  that  we  shall 
find  the  key  to  our  pood  fortune.  ....  The  whole  world  is  inter- 
dependent, and  you  cannot  in.iure  one  member  of  the  international 
body  without  injuring  all  the  rest." 


THE  NEW  ECONOMIC  LIFE  23 

1.  Any  workable  plan  for  the  organization  of  the  world 
must  have  an  economic  foundation. 

2.  Such  a  plan  must  include  all  of  the  economically  essen- 
tial portions  of  the  world.     It  will  be  ineffective  if  it 
is  confined  to   any  one  nation,  to  any  one  group   of 
nations,  or  to  any  one  continent. 

3.  Such  a  plan  must  rely,  for  its  fulfillment,  on  world 
thinking  and  world  organization. 

These  propositions  do  not  imply  that  economic  forces  and 
•world  organization  must  become  the  centers  of  exclusive 
attention.  There  are  potent  forces,  other  than  economic  ones, 
and  there  are  forms  of  local  organization  that  must  be 
developed  or  perpetuated  as  a  matter  of  course.  But  for  the 
moment  the  economic  forces  and  the  world  phases  of  organiza- 
tion have  assumed  a  position  of  primary  importance. 

5.     The  League  of  Nations  Failure 

The  principal  scheme  recently  advanced  as  a  means  of 
co-ordinating  the  life  of  the  world — the  League  of  Nations 
Covenant — violates  all  three  of  these  essential  principles.  In 
the  first  place,  the  League  Covenant,  with  certain  minor 
exceptions,  is  a  political  and  not  an  economic  document, 
devoting  its  attention  to  territorial  integrity  and  the  preserva- 
tion of  sovereignty,  and  passing  over  such  economic  problems 
as  resource  control,  and  the  competition  for  raw  materials, 
markets  and  investment  opportunities  as  though  they  were 
non-existent.  In  the  second  place  instead  of  concerning  itself 
with  all  of  the  integral  parts  of  the  world,  it  treats  nations 
other  than  the  "big  five"  ("Britain,  France.  Italy,  Japan  and 
the  United  States)  as  though  they  were  of  second  or  of  third 
rate  importance.  China,  India,  Germany,  Russia  and  Latin 
America,  with  considerably  more  than  half  of  the  world's 
population,  and  with  at  least  half  of  the  world's  essential 


24  THE  NEXT  STEP 

resources,  were  slighted  or  ignored.  In  the  third  place,  the 
League  Covenant  is  not  based  on  world  thinking.  On  the 
contrary,  it  was  designed  to  set  up  one  part  of  the  world, 
the  victorious  Allies,  against  four  other  parts  of  the  world : 
the  enemy  countries.  Soviet  Russia,  the  undeveloped  (unex- 
ploited)  countries,,  and  the  small  and  powerless  countries. 
Political,  sectional  and  provincial  in  its  point  of  view,  the 
League,  as  a  means  of  world  organization,  was  destined,  from 
its  inception,  to  pathetic  failure.  "World  economic  life  is  an 
established  fact  of  such  moment  that  it  must  be  reckoned  with 
in  any  scheme  for  social  rebuilding. 

A  capacity  for  organization  and  for  conscious  improve- 
ment distinguishes  man  from  most  of  the  animals.  In  the 
past,  men  have  organized  the  army,  the  church,  the  city,  the 
nation,  the  school.  The  events  surrounding  the  industrial 
revolution  have-  placed  a  new  ta.--k  on  their  shoulders — the 
task  of  organizing  world  economic  life. 

"Without  doubt  this  is  the  largest  and  the  most  intricate 
problem  in  organization  that  the  human  race  has  ever  faced. 
On  the  oilier  hand,  the  interdependence  of  economic  life 
invites  co-ordination,  while  the  advances  in  organization 
methods,  particularly  among  the  masses  of  the.  people,  render 
the  transition  from  local  to  world  organization  quite  logical 
and  relatively  easy — far  easier,  certainly,  than  the  first  hesi- 
tating steps  that  the  race  took  in  the  direction  of  co-operative 
activities.  Even  though  the  task  were  far  more  difficult  than 
it  is.  the  race  mu-t  perform  ii  or  pay  an  immense  price  in 
hardship,  suffering  and  decimation. 

The  work  is  already  begun.  Private  capitalists  have  built 
world  systems  of  trade,  transport  and  banking.  Soviet  Russia, 
has  made  an  heroic  attempt,  to  organize  one  portion  of  the 
earth's  surface  along  economic  lines.  For  the  most  part, 
however,  the  task  of  co-ordinating  the  world's  economic  life 
awaits  the  courage  and  the  irenius  of  a  generation  that  shall 
add  this  triumph  to  the  achievements  of  the  race. 


THE  NEW  ECONOMIC  LIFE  25 

6.  Axioms  of  Economic.  Reorganization 

Certain  well-defined  and  widely  understood  principles, 
that  might  almost  be  called  axioms  of  social  procedure,  are 
to  be  reckoned  with  in  any  effort  at  world  economic  reorgani- 
zation. For  convenience  of  discussion,  they  may  be  summar- 
ized thus : 

1.  The  u'hccls  of  industry  must  be  kepi  turning  smoothly, 
regularly  and  efficiently. 

A  country  like  Russia,  consisting1,  for  the  most  part  of  agri- 
cultural villages,  can  survive,  even  though  machine  industries 
practically  cease  to  function,  while  such  countries  as  Germany 
and  Britain,  built  of;  Bremens,  Hamburg's,  Essens,  Glasgows 
and  Manchester^  a:e  dependent  for  then'  food  supply  as  well 
as  for  their  supply  of  raw  materials  upon  the  continued  pro- 
duction and  transport  of  commodities.  The  State  of  Uhodo 
Island,  with  its  07..")  per  cent  of  city  and  town  dv.-elh-rs, 
typifies  this  dependence.  Given  such  concent  rated  popula- 
tions encragecl  in  specialized  industries,  and  the  cessation  of 
production  means  speedy  starvation  for  those  that  cannot 
migrate. 


The  increase  of  population  and  the  normal  advances  in  science 
and  industry  both  demand  a  volume  of  product  adequate  to 
cover  the  necessary  increases  in  equipment. 

3.  Tlii'  pioplc,  u'Jio  rl'j  /!»'  u'o'i'l:  must  dispose  of  ///<'  prod- 
ucts lh  i ;/  turn  oui. 

They  may  consume-  them  all,  or  they  may  reserve  a  portion 
of  them  for  new  roads,  for  additional  rollum-  stock,  for  the 
advancement  of  art  and  1  earning.  "Whatever  the  character  of. 
the  decision,  the  riu'ht  and  power  to  make  it  rests  with  those 
who  produce  the  goods  of  which  a  disposition  is  being  made. 


26  THE  NEXT  STEP 

4.  Justice   and   fair   dealing    must   be    embodied    in   the 
scheme  of  production  and  distribution. 

This  does  not  mean  absolute  justice,  but  as  much  justice  as 
the  collective  intelligence  and  will  of  the  community  are  able 
to  put  into  force.  For  the  attainment  of  such  a  result,  the 
forms  of  social  life  must  be  constantly  altered  to  keep  pace 
with  economic  change. 

5.  The  foregoing  principles  must  apply,  not  to  one  man,  or 
class,   or  people,   but   to   all   men,  all   classes  and   all 
peoples. 

Recent  events  have  shown  that  an  injury  to  one  is  an  injury 
to  all.  Reasoning,  foresight  and  experience  will  convince 
the  people  of  the  world  that  a  benefit  to  one  is  a  benefit  to  all. 
While  men  continue  to  live  together,  their  livelihood  prob- 
lems must  be  thought  about  collectively,  and  the  solutions 
that  are  determined  upon  must  be  applied  to  all,  without 
discrimination. 

How  shall  such  results  be  obtained  ?  By  what  means  is  it 
possible  to  lead  men  to  a  world  vision?  Who  can  persuade 
them  to  work  toward  the  building  of  a  sounder  society  than 
that  with  which  the  world  is  now  laboring  ? 

Of  all  the  issues  that  confront  the  teachers  of  men,  this 
is  one  of  the  most  pressing  and  most  insistent.  Those  who 
have  taken  upon  themselves  the  task  of  seeking  out  and  of 
expounding  ideas  have  seldom  faced  a  graver  responsibility 
than  that  with  which  they  are  at  the  moment  confronted. 
World  facts  demand  world  thoughts  and  world  acts,  before  the 
human  race  can  adopt  saner,  wiser  and  more  enlightened 
economic  policies.  World  thoughts  and  acts  are  impossible 
without  world  understanding.  Therefore  it  is  world  under- 
standing that  is  most  imperatively  needed  in  this  critical  hour. 

The  people  of  the  world  have  many  things  in  common — 
economic  interests,  science,  art.  ideas,  ideals.  Ranged  against 
these  common  interests  there  are  the  traditions,  prejudices, 


THE  NEW  ECONOMIC  LIFE  27 

hatreds,  national  barriers,  sectarian  differences,  language 
obstacles  and  racial  conflicts  that  have  proved  so  effective  in 
keeping  the  peoples  separated.  The  common  interests  are  the 
vital  means  of  social  advancement,  and  it  is  upon  them  that 
the  emphasis  of  constructive  thinking  must  be  laid  in  an 
effort  to  promote  world  understanding. 

There  is  no  need  to  apologize,  then,  for  adding  to  groaning 
library  shelves  a  book  dealing  with  world  economics,  the  pur- 
pose of  which  is  to  propose  a  plan  that  will  pull  together  the 
scattered  threads  of  world  economic  life.  The  time  is  so  ripe 
for  an  examination  of  these  problems  that  no  man  may  con- 
sider himself  informed  who  has  not  pondered  them  deeply, 
and  no  man  may  consider  that  he  has  done  his  duty  as  a 
member  of  this  generation,  who  has  not  helped,  at  least  in 
some  degree,  to  unify  the  world's  economic  activities.  Most 
particularly  does  this  apply  both  to  the  statesmen  and  other 
public  men  who  are  striving  to  rejuvenate  a  dying  order,  and 
to  the  organizers  and  leaders  of  the  new  order  that  is  even 
now  pressing  across  the  threshold  of  the  western  world. 


II.     THE    ECONOMIC    MUDDLE 

1.     Bankruptcy  and  Chaos 

economic  affairs  are  in  a  muddle.  Famine  has 
gripped  Central  Europe  since  1918 ;  unemployment  is  rife  in 
Japan,  Argentina,  Britain,  and  the  United  States ;  business 
depression  is  felt  in  all  of  the  principal  industrial  countries ; 
producer  and  consumer  alike  find  the  world's  economic 
machinery  sadly  out  of  gear. 

There  have  been  innumerable  predictions  of  "better  times 
ahead/'  but  among  those  who  are  closely  connected  with 
industry,  there  is  serious  concern  over  the  future  of  the 
present  economic  system,  while  a  formidable  array  of  students 
and  investigators  agree  with  Bass  and  Moulton  that:  "It  is 
not  at  all  beyond  the  bounds  of  possibility  that  all  of  con- 
tinental Europe  might  in  the  course  of  the  next  twenty-five 
years,  or  even  sooner,  go  the  way  that  Russia  has  already 
gone.  It  would  not  necessarily  be  through  the  instrumental- 
ity of  Bolshevism;  it  might  easily  go  in  the  Austrian  way." 
("America  and  the  Balance  Sheet  of  Europe."  Xew  York. 
Ronald  Press.  1921.  p.  138-9.) 

The  cause  for  such  gloomy  utterances  may  be  found  in 
those  superficial  indications  of  chaos  such  as  the  break-down, 
of  exchange  and  of  international  trade;  the  severe  business 
depression;  the  waste  and  inefficiency  of  industry;  the  prev- 
alence of  unrest  and  sabotage,  and  the  preparations  for  future 
wars. 

Traditionally,  the  old  institutions  still  exist  and  are  cher- 
ished by  those  who  believe  that  they  will  be  rehabilitated  and 
re-established.  But  as  the  mouths  succeed  one  another  and 
lengthen  into  years,  without  any  evidence  that  "things  will 

28 


THE  ECONOMIC  MUDDLE  29 

right  themselves  as  soon  as  the  war  is  over,"  it  becomes 
increasingly  apparent,  even  to  the  conservative  that  the  situ- 
ation is  far  from  what  they  had  promised  themselves  it  would 
be.  Europe's  day-to-day  experience  between  1919  and  1922 
has  convinced  millions  that  some  disaster  impends.  For  the 
most  part,  however,  they  fail  to  realize  that  the  "disaster"  is 
already  upon  them. 

The  disorganization  of  the  world's  financial  structure, 
following  011  the  drains  of  the  war  and  the  debauches  and 
exactions  of  the  peace,  has  been  the  object  of  much  comment, 
with  the  emphasis  laid  on  the  aspects  rather  than  on  the 
essential  characteristics  of  the  breakdown. 

One  of  the  basic  assumptions  of  the  present  economic 
order  is  that  promises  to  pay  must  be  redeemed  at  par. 
Failing  in  this  redemption,  the  promisor  is  declared  bank- 
rupt, and  beyond  the  pale  of  reputable  business  society. 

During  the  past  eight  years,  most  of  the  leading  countries 
of  Europe  have  become  bankrupt.  Before  the  "World  War, 
the  sixteen  principal  belligerents  had  total  debts  of  28,660 
millions  of  dollars,  with  a  total  note  circulation  of  5,000 
millions,  making  a  total  of  promises  to  pay  amounting  to 
something  more  than  33  billions  of  dollars.  When  the  Treaty 
of  Paris  was  signed,  these  sixteen  countries  reported  debts 
of  171,633  millions  of  dollars  and  paper  money  issues  of 
77,954  millions,  making  a  total  of  promises  to  pay  about 
eight  times  the  volume  of  1913.  Since  the  signing  of  the 
Treaty,  most  of  the  European  countries,  belligerents  and 
neutrals  alike,  have  continued  to  pile  up  obligations.  Accord- 
ing to  the  estimates  of  0.  P.  Austin,  of  the  National  City 
Bank  of  New  York,  world  indebtedness  was  vS  billions  of 
dollars  in  1913,  205  billions  in  19] 8  and  400  billions  in  1921. 
("Our  Eleven  Billions,"  R.  Mountsior.  Seltzer.  1922.  p. 
43. }  A  point  has  now  been  reached  where  the  French,  Rus- 
sian, Italian,  German,  Austrian  and  Hungarian  debts  are 
equal  to  at  least  half  of  the  total  estimated  national  wealth. 


30  THE  NEXT  STEP 

TThen  it  is  remembered  that  most  of  this  wealth  is  in  private 
hands,  and  heavily  encumbered  with  private  mortgages ;  that 
the  cities  have  issued  enormous  numbers  of  bonds  against  the 
same  wealth,  and  that  even  though  the  wealth  were  in  public 
hands  it  could  not  be  liquidated  for  anything  like  its  estimated 
value,  it  must  be  apparent  that  the  capitalist  world — particu- 
larly that  part  lying  in  Central  Europe — has  put  itself  into 
a  position  where  its  governments  cannot  meet  their  promises 
to  pay. 

Xor  is  this  the  worst.  The  war  experience  taught  Euro- 
pean government  officials  that  it  was  possible  to  make  money 
and  pay  debts  with  the  aid  of  printing  presses.  The  rapid 
increase  in  prices,  and  the  unwillingness  of  the  owning  classes 
to  pay  for  the  war  by  means  of  a  capital  levy,  placed  the 
governments  in  a  position  where  the  ordinary  expenses,  plus 
the  costs  of  the  war,  the  interest  on  the  war  bonds,  the  costs 
of  reparations  and  other  extraordinary  expenses  amounted  to 
far  more  than  the  total  government  revenue.  As  lately  as 
1920,  all  of  the  European  belligerents,  with  the  exception  of 
Great  Britain,  all  of  the  European  neutrals,  except  Sweden, 
and  all  of  the  other  principal  countries  of  the  world  except 
Peru  and  the  Tnited  States,  reported  expenditures  in  excess 
of  receipts.  The  deficit  for  Austria  amounted  to  38  per  cent 
of  its  expenditures.  In  other  principal  countries  the  ratio 
of  deficit  to  expenditure  was: 

Belgium    60  per  cent 

France "t 

Germany 46    ' 

Italy    .'. 21    "        " 

Japan 17    "        " 

("Our  Eleven  Billions."  p.  40-41). 

Those  events  led  inevitably  to  a  demoralization  of  the 
foreign  exchange  market,  which  reflects  the  measure  of  con- 
fidence felt  bv  the  business  men  of  one  community  in  the 


THE  ECONOMIC  MUDDLE  31 

promises  to  pay  made  by  the  government  of  another  commu- 
nity. The  exchange  values  of  the  non-warring  countries 
remained  generally  near  to  par  during  the  entire  war  and 
post  war  period.  Japanese  exchange  fluctuated  very  little; 
British  pounds,  which  up  to  the  time  of  the  war  were  recog- 
nized the  world  over  as  the  standard  of  value,  fell  to  about 
three  fifths  of  their  par  value  as  expressed  in  dollars;  the 
French  franc  and  the  Italian  lira  fell  to  a  quarter  of  their 
par  values,  while  the  Russian  ruble,  the  German  mark,  the 
Austrian  and  the  Polish  crowns  fell  to  less  than  one-tenth 
of  one  per  cent  of  par.  In  addition  to  the  serious  depreciation 
of  these  various  currencies,  their  values  fluctuated  from  day  to 
day  and  hour  to  hour,  making  business  transactions  difficult  or 
impossible. 

Coupled  with  the  disorganization  of  exchange  has  been 
the  economic  depression  which,  beginning  in  March,  1920, 
spread  like  a  tidal  wave,  bringing  disaster  and  hardship  to 
workers,  farmers  and  business  men.  With  abundant  crops, 
Avith  industries  united  into  great  combinations,  with  the  banks 
more  efficiently  organized  than  ever  before  in  modern  times, 
there  should  have  been  no  crisis  according  to  the  accepted 
economic  philosophy,  or,  if  there  was  a  temporary  set-back 
following  the  strain  of  the  war,  it  should  have  been  a  regu- 
lated panic.  But  despite  the  predictions  the  depression  came, 
and  proved  to  be  one  of  the  most  severe  that  the  modern  world 
has  experienced.  The  thoughtful  man  noting  these  facts, 
and  then  learning  that,  beginning  with  the  hard  times  of 
1^14,  there  have  been  seventeen  of  the<e  breakdowns  in  the 
economic  machinery  of  the  Tinted  States,  with  corresponding 
derangements  in  France,  Britain,  fiermany  and  the  other 
industrial  countries;  and  Icarn'mir  further  that  there  is  a 
tendency  for  such  catastrophes  to  become  more,  rather  than 
less  severe,  begins  1o  wonder  whether  the  difficulty  is  not  very 
much  more  deep-seated  than  many  public  m-  n  would  have 
him  believe.  Even  the  most  stalwart  supporters  of  the  present 


32  THE  NEXT  STEP 

order  must  agree  that  the  system  does  not  function  smoothly. 
There  are  many  bumps,  jars  and  hitches,  and  considerable 
friction. 

Another  evidence  of  economic  chaos  is  furnished  by  the 
extent  of  industrial  waste.  Studies  in  industrial  efficiency 
have  led  recently  to  the  publication  of  a  number  of  reports, 
the  most  ambitious  of  which,  "Waste  in  Industry,"  issued 
by  the  Committee  on  the  Elimination  of  "Waste  in  Industry 
of  the  Federated  Engineering  Societies  of  the  United  States, 
describes  waste  under  four  aspects : 

1.  Low  production  caused  by  faulty  management  of  mate- 
rials, plant,  equipment  and  men. 

2.  Interrupted    production,    caused    by    idle    men,    idle 
materials,  idle  plant  and  idle  equipment. 

3.  Restricted  production,  intentionally  caused  by  owners, 
management  or  labor. 

4.  Lost  production,  caused  by  ill  health,  physical  defects 

and  industrial  accidents.      (Page  8.) 

With  these  various  kinds  of  waste  in  mind  the  committee 
made  a  survey  of  some  of  the  leading  industries  in  the  T/nited 
States,  and  drew  up  a  table  showing  the  percentage  of  waste 
found  in  each  industry.  The  figures  were  as  follows  : 

Men's  Clothing  Manufacturing.  .63.78  per  cent 

Building  Industry 53.00    'c 

Printing 57. Gl 

Hoot  and  Shoe  Manufacturing  .  .  .40.93    " 

Metal  Trades 28. G6    " 

Textile  Manufacturing   49.20    " 

The  bulk  of  the  responsibility  for  this  waste  is  placed  en 
"management." — the  lowest  percentage  (50  per  cent)  in  Tex- 
tile Manufacturing,  and  the  highest  (81  per  cent)  in  the  Metal 
Trades.  The  remainder  of  the  responsibility  is  shared  by 
labor,  with  a  minimum  of  9  per  cent  in  the  Metal  Trades 
and  a  maximum  of  28  per  cent  in  Printing,  and  by  miscel- 


THE  ECONOMIC  MUDDLE  33 

laneous  causes,  with  a  minimum  of  9  per  cent  in  Men's 
Clothing  and  Printing  and  a  maximum  of  40  per  cent  in 
Textile  Manufacturing.  (Page  !).) 

There  are  a  number  of  angles  from  which  this  result  may 
l)e  viewed.  Waste  may  be  looked  upon  merely  as  the  index 
of  industrial  inefficiency  due  to  the  failure  of  the  industrial 
mechanism  to  adjust  itself  to  the  demands  made  upon  it.  In 
that  case  the  remedy  for  the  waste  is  superior  adjustment  of 
the  present  system  to  itself.  On  the  other  hand,  if  the  waste 
is  the  result  of  friction  generated  within  the  system,  there 
must  be  some  change  in  the  system  before  it  can  be  eliminated. 
The  latter  explanation  seems  to  tally  with  the  facts  more 
thoroughly  than  does  the  former.  Certainly,  the  unrest,  bit- 
terness and  general  sabotage  which  are  encountered  through- 
out the  industrial  order  would  point  to  the  conclusion  that 
the  economic  system  is  gener;uin,u'  iis  own  condition  of  chaos. 

Sabotage,  or  "go  slo\v."  is  becoming  the  dominant  note  of 
the  entire  economic  system.  "Get  the  most  you  can  out  and 
put  the  least  possible  in."  is  the  theory  upon  which  both 
workers  and  owners  are  operating.  There  has  been  much 
comment  upon  the  tendency  of  the  workers  to  use  the  go  slow 
tactics.  The  real  withholding  of  productive  effort,  however, 
takes  place  amonu1  the  owners  and  managers  (if  industry. 

Industrial  leaders  are  well  versed  in  the  law  of  monopoly 
profit :  "Minimum  product  at  maximum  price."  The  railroad 
men  have  rephrased  the  law  thus:  "All  that  the  traffic  will 
bear."  Industry  has  been  orirani/ed  and  capitalized  and  is 
now  owned  by  a  group  whose  interests  lie,  not  in  the  extent 
of  production,  but  in  the  volume  of  profit.  "When  profit  is 
no  lonu''-r  forthcoming,  the  owners  practice  the  con>rinns 
withholding  of  efficiency.  In  accordance  with  this  ireneral 
policy  the  control  of  industry  is  shifting  from  the  hands  of 
engineers  in  to  the  hands  of  financial  experts  "who  are  unre- 


34  THE  NEXT  STEP 

and  yet  they  continue  to  be  entrusted  with  the  community 
industrial  welfare,  which  calls  for  maximum  production.'' 
(''The  Engineers  and  the  Price  System,"  Thorstein  Veblen. 
Huebsch.  1921.  p.  40-41.)  The  recent  cry  of  the  American 
farmer:  "Produce  only  what  you  need  for  your  own  keep." 
is  a  crude  effort  to  imitate  the  successful  tactics  of  the  busi- 
ness world  in  limiting  production  to  the  volume  that  will 
yield  the  greatest  possible  profit  to  the  owner. 

"War-menace  constitutes  another  indication  of  the  chaos 
existing  in  modern  economic  society.  The  purpose  of  eco- 
nomic activity  is  to  produce  wealth.  The  purpose  of  war  is 
to  destroy  it.  The  two  are  therefore  in  direct  antagonism ; 
yet  the  greatest  war  machines  are  maintained  by  the  greatest 
industrial  nations.  To  reply  that  they  have  the  big  war 
machines  because  they  can  afford  to  pay  for  them,  is  no  con- 
clusive answer.  The  organizing  of  nations  for  war  came  into 
present-day  society  with  the  present  industrial  system.  Indus- 
trial leaders  have  engaged  in  a  great  competitive  struggle 
from  which  the  final  appeal  was  always  the  appeal  to  arms. 
Furthermore,  one  of  the  most  profitable  businesses  has  been 
that  of  making  the  munitions  and  supplies  required  for  the 
prosecution  of  war.  Xor  is  there  wanting  evidence  that  mod- 
ern wai's  have  been  made  for  profits — that  they  have  been 
"commercial  wars,"  as  President  "Wilson  put  it. 

There  is  no  longer  any  question  but  that  the  forces  behind 
the  -world  war  were  in  the  main  economic.  The  war  was 
fonirht  by  capitalist  empires,  for  the  furtherance  of  capitalist 
enterprises.  The  publication  of  the  secret  treaties  entered 
into  by  the  Allies  in  IfUfi  eives  conclusive  proof  of  the  land 
grabbing  eharaeter  of  the  Allies'  intentions.  There  can 
scarcely  lie  any  question  of  the  existence  of  similar  intentions 
on  the  side  of  the  fVntral  Empires.  The  forces  that  con- 
stituted the  war  menace  in  1014  were  the  economic1  forces 
arising  out  of  the  competitive  economic  regime  that  domi- 
nated the  European  world  at  that  time. 


THE  ECONOMIC  MUDDLE  35 

Since  the  ending  of  the  Avar,  these  forces  have  been  aug- 
mented rather  than  abated.  To  them  there  must  be  added  the 
other  element  of  danger  that  threatens  to  throw  Europe 
again  into  turmoil.  Soviet  Russia  is  and  for  a  time  must 
remain  a  source  of  international  bitterness  among  the  great 
capitalist  nations,  while  the  struggle  for  the  control  of  the 
Xear  East  is  fraught  with  consequences  as  momentous  as  was 
the  pre-war  German  dream  of  a  railroad  from  Berlin  to 
Baghdad.  Unrest  in  Egypt,  India,  Korea,  and  the  other 
countries  held  in  subjection  by  the  power  of  the  bayonet;  the 
contest  between  Japan.  Britain  and  the  United  States  for 
the  control  of  the  Pacific  and  the  exploitation  of  China ;  the 
unrest  and  revolution  that  are  stirring  in  China;  the  keen 
intensity  of  the  struggle  for  foreign  markets  and  for  such 
strategic  resources  as  the  supply  of  petroleum,  are  all  sug- 
gestive of  a  situation  resembling  an  open  gasoline  can  sur- 
rounded by  lighted  matches.  And  to  add  the  last,  and 
the  most  realistic  touch  to  the  picture,  there  are  a  million 
more  men  Tinder  anus  in  Europe  than  there  were  in  101.'},  while 
the  military  and  naval  authorities  in  all  of  the  leading  coun- 
tries are  busy  planning  how  and  where  the  next  war  is  to  be 
fought.  (See  "The  Next  War,"  Will  Envin.  Dutton,  1021  ; 
''The  Coming  "War  with  America,"  John  MacLean.  British 
Socialist  Party,  1020;  "War  in  the  Future."  F.  von  Bern- 
hardi.  Berlin.  1020;  ''The  Inevitable  Wai:  between  Japan 
and  America."  F.  Wencker.  Stuttgart,  1021;  "Coal,  Iron 
and  War,"  E.  C.  Eckel.  Xew  York,  Holt,  1020.  etc.)  Before 
the  grass  was  green  over  the  graves  where,  lies  the  flower  of 
Europe's  manhood,  leaders  of  the  present  order  were  busy 
with  the  blueprints  of  another  carnage. 

The  fads  speak  for  themselves.  The  existence  of  such 
chaos  is  a  maiter  of  every  day  comment  and  experience. 
Though  its  nature  and  its  causes  are  little  understood,  there 
is  uo  issue  of  more  immediate  concern  to  the  western  world 
than  the  intelligent  solution  of  the  vexing  questions  ari^incr 
out  of  the  production  and  distribution  of  wealth. 


36  THE  NEXT  STEP 

Until  the  Prussian  Piovolution  of  1917,  the  entire  western 
world  was  so  organized  that  one  group  or  class  owned  the 
land,  the  machines  and  the  productive  devices  with  which 
other  groups  or  classes  worked  in  order  to  live.  The  estab- 
lishment of  this  "capitalist''  system  between  1750  when  it 
had  its  start  in  England,  and  18(30,  when  it  secured  a  foothold 
in  Japan,  has  raised  certain  questions  of  economic  procedure 
which  lie  at  the  background  of  the  economic  problems  which 
men  are  seeking  to  understand  and  to  solve. 

There  is  no  necessity  for  an  elaborate  discussion  of  these 
problems,  since  they  are  at  the  moment  quite  generally  under 
the  dissecting  knife  of  social  students,  reformers  and  revolu- 
tionaries. They  may  be  divided  into  two  main  groups  : — those 
which  are  localized  In  character  and  those  which  are  world- 
wide in  character.  Perhaps  the  latter  group  might  be  called 
"worldized." 

2.  Local  izrrl  Prolilfm* 

There  are  a  number  of  outstanding  economic  problems  that 
affect  locally,  each  community  that  has  adopted  the  capitalist 
system.  Among  the  most  important  of  them  are: 

1.  The  relations  between  the  job  owner  and  the  job  taker. 

These  relations  involve  the  question  as  to  whether  job 
control  shall  be  vested  in  those  who  hold  the  property  or  in 
those  vrho  do  the  work.  The  issue  is  an  old  one,  intensified 
to-day  bv  the  absentee  ownership  which  stocks  and  bonds 
make  possible,  and  aggravated  by  the  presence  of  vast  indus- 
trial establishments  in  which  there  are  employed  thousands 
of  workers  without  the  possibility  of  any  direct  contact 
between  jo],  owners  and  job  takers. 

•_'.   The  di  ion  of  wealth  and  income. 

Another   old    issue   has   returned   to   plague   a  society  that 


THE  ECONOMIC  MUDDLE  37 

yet  there  has  been  no  general  effort  to  see  that  tin;  advantages 
of  this  wealth  production  go  to  those  who  are  in  need  of  food, 
clothing  and  shelter.  Indeed,  under  the  present  order,  mil- 
lions of  those  who  work  are  called  upon  to  accept  a  .standard 
of  living  which  represents  less  than  physical  health  and  social 
decency,  while  those  who  own  the  land  and  the  machinery  with 
which  the  wealth  is  produced  are  able  to  exact  a  rent  or 
unearned  income  that  keeps  them  permanently  on  easy  street. 
This  embittering  contrast  between,  the  house  of  have  and  the 
house  of  want  is  leading  to-day,  as  it  has  in  any  historical 
society,  to  division  and  conflict,  for,  as  Madison  wisely 
observed  in  the  Federalist,  "The  most  common  and  durable 
source  of  factions  has  been  the  various  and  unequal  distribu- 
tion of  property." 

3.  The  inter-relation  of  industries. 

So  long  as  there  was  a  direct  connection  between  a  worker 
and  the  product  which  he  turned  out,  economic  life  was 
simple.  AVhen,  however,  the  coal  dug  in  eastern  Pennsylvania 
was  used  to  heat  houses  in  Minneapolis  while  wheat  grown  in 
Dakota  was  milled  in  Duluth,  mad-1  into  crackers  in  Boston 
and  sold  all  over  Xew  England,  there  arose  the  problem,  of 
the  relation  between  mining,  wheat  raising,  transport,  manu- 
facturing, and  merchandising.  Thus  far  the  banker  has  acted 
as  the  go-between  in  holding  this  machinery  together,  but  he 
labors  under  two  important  disqualification:-,:  first,  he  does 
not  represent  anyone  except  himself  and  his  fellow  owners 
and  's  therefore-  not  socially  responsible  for  what  h>'  does;  in 
the  second  place,  like  every  other  business  man.  h-1  is  out  to 
make  a  profit  rather  than  In  render  the  community  a  service. 

TTence   the    structure    of    hidii  trial    - if'y    rests    in    chaotic 

dependence   upon    the   ambitions   and    foibles    of   self-s    : 
financiers. 

4.  Attempts  a1  government  control  of  industry. 

The  iri'iiaicd  people,  incensed  by  repeated  acts  of  eco- 
nomic tyranny,  have  turned  to  the  political  state,  which  has 


38  THE  NEXT  STEP 

been  thought  of  as  the  guardian  of  popular  rights  in  a  democ- 
racy, and  through  regulatory  legislation  the  appointment  of 
commissions,  and  even  through  state  competition  they  have 
sought  to  bring  obstreperous  business  interests  under  the  wing 
of  state  control.  These  efforts  have  generally  failed :  the  busi- 
ness interests,  through  their  control  of  the  economic  surplus, 
have  dominated  the  commissions  and  have  used  the  machinery 
of  the  political  state  as  the  instrument  for  further  exploiting 
ventures ;  the  police,  the  courts,  the  executive  power,  the 
military — all  have  been  employed  by  the  owners  and  exploiters 
against  the  workers.  The  issue  between  the  empires  of  indus- 
try and  the  political  state  still  remains  one  of  the  most  vexing 
in  the  field  of  public  life. 

These  problems  of  job  control,  of  wealth  and  income  dis- 
tribution, of  industrial  inter-relations  and  of  the  relation 
between  the  state  and  industry  are  pressing  for  solution  in 
every  important  centre  of  modern  economic  life.  Each  con- 
stitutes a  disturbing  element  and  contributes  its  mite  to  the 
aggregate  of  social  instability  and  unrest  that  are  racking  the 
economic  world. 

3.     World  Problems 

Aside  from  these  problems,  localized  in  character,  though 
world-wide  in  their  distribution,  there  are  a  number  of  other 
problems  of  a  world  character  which  also  are  factors  in  the 
disorganization  of  economic  life.  One  of  these  world  problems 
is  the  competitive  struggle  between  economic  groups  for  trade, 
markets,  resources  and  investment  opportunities;  another  is, 
the  excessive  concentration  of  the  world's  wealth  in  a  few 
centres. 

4.  Competition  for  Economic,  Advantage 

The  issue  of  non-redeemable  promises  to  pay  has  crippled 
the  world's  credit  machinery.  The  competition  for  economic 
advantage  has  played  havoc  with  the  world's  social  stability. 


TITE  ECONOMIC  MFDDLE  39 

Theoretically  the  coffee  grower  of  Brazil  and  the  agricul- 
tural machine  manufacturer  of  Illinois  produce  and  exchange 
those  things  that  they  can  turn  out  most  advantageously. 
Practically  the  resources  of  the  world  are  monopolized  by 
powerful  financial  interests  each  striving  to  destroy  its  rivals, 
each  seeking  its  own  enrichment,  and  each  busy  reinvesting 
the  surplus  wealth  which  piles  up  as  the  result  of  exploitation 
at  home  and  abroad. 

Competition  for  economic  advantage  has  followed  the  line 
of  greatest  profit.  The  present  age  inherited  from  the 
mediaeval  economic  world  certain  time-honored  trade  rivalries 
such  as  those  which  had  existed  between  l\ome,  Carthage  and 
Corinth  in  classic  times,  or  between  Holland,  France  and 
England  in  more  modern  days.  These  trade  rivalries  concern 
themselves  with : 

1.  The  transport  of  goods  and  people. 

2.  The   financing   of    such   transactions    through    bills    of 
exchange,  and  the  like. 

3.  The  insuring  of  trading  ventures. 

The  people  which  succeeded  in  obtaining  the  carrying  trade 
quite  generally  secured  the  banking  and  insurance  business, 
both  of  which  until  recent  years,  have  been  principally  con- 
cerned with  trading. 

The  trade  of  the  middle  ages  was  small  in  volume,  and  was 
carried  on,  for  the  most  part,  in  valuable  commodities,  since 
the  cost  of  transporting  bulky,  cheap  articles  was  generally 
prohibitive.  AVilli  the  emergence  of  modern  industry,  and 
its  production  of  large  amounts  of  surplus  commodities, 
important  industrial  groups  like  Britain  and  Germany  which 
depended  for  their  prosperity  on  their  ability  to  find  foreign 
markets  for  their  surplus  commodities,  have  been  driven  to 
a  fierce  struirirle  for  these  markets. 

Latterly  the  effort  to  dispose  of  surplus  has  taken  a  new 
form — the  investment  of  capital  in  foreign  enterprises.  In- 
stead of  trying  to  sell  an  electrical  plant  to  the  city  of  Buenos 


40  THE  NEXT  STEP 

Aires,  a  German  business  adventurer  (enterpriser)  secures  a 
contract  to  build  the  plant,  buys  the  equipment  from  the 
German  General  Electric  Company,  takes  the  bonds  of  the 
City  of  Bnenos  Aires  in  payment  for  the  plant,  and  finances 
the  transaction  by  selling  the  bonds  to  a  German  banking 
syndicate.  Through  this  process,  the  German  (or  Belgian,  or 
British)  business  world  invests  its  funds  in  "undeveloped" 
countries. 

At  the  outbreak  of  the  "World  "War,  foreign  investment 
had  become  a  science,  with  the  British  leading  all  of  the 
investing  nations.  C.  K.  Hobson,  in  his  book,  "The  Export 
of  Capital,"  and  in  a  later  article  in  the  "Annals  of  1he 
American  Academy"  for  November,  1916,  throws  some  impor- 
1ant  side-lights  on  British  foreign  investments.  He  notes  that 
for  some  years  preceding  the  war,  Britain  had  never  invested 
less  than  500  millions  of  dollars  per  year  in  foreign  countries 
and  that  just  before  the  outbreak  of  the  war,  the  annual  export, 
of  capital  had  reached  a  total  of  a  billion  dollars  per  year.  Tn 
1913  the  British  foreign  investments  were  approximately  20 
billions  of  dollars,  distributed  geographically  in  a  most  sig- 
nificant fashion.  The  largest  investment  (3,750  millions  of 
dollars)  was  in  the  United  States;  then  came  Canada  wiih 
2.500  millions;  following  were  India,  l.SOO  millions.  South 
Africa,  the  same  amount,  Australia,  3.500  millions,  and 
Argentina  a  like  sum.  The  British  investments  in  Belgir.;-i, 
I'Yance,  Germany  and  Austria  were  negligible.  Thus  it  was 
in  the  new  nnd  undeveloped  countries,  not:  in  tho  old  and 
developed  ones  lhat  Britain  sought  her  investment  opportuni- 
ties. In  their  efforts  to  play  at  this  great  game  of  imperial- 
ism, and  to  win  their  share  of  profitable  business,  Germany, 
France.  Japan,  Belgium  and  the  United  States  were  clogging 
the  British  beds. 

Eaeh  of  ill"  important  producing  countries  must  provid-1 


cotton,  rubber,  wheat,  etc.,  upon  which  the  continuance  of  its 


THE  ECONOMIC  MUDDLE  41 

industrial  life  depends.  Consequently  each  of  these  countries 
busies  itself  to  secure  the  control  of  the  largest  possible  re- 
serves of  the  raw  materials  most  needed  by  its  own  industries. 

The  case  of  petroleum  is  peculiarly  instructive.  When  it 
became  apparent,  in  the  early  years  of  the  present  century 
that  oil  burning  ships,  motor  vehicles  and  air  craft  were 
bound  to  play  a  determining  part  in  the  economic  life  of  the 
immediate  future,  various  interests  such  as  the  Shell  Trans- 
port, Royal  Dutch  and  the  Standard  Oil,  with  the  open  or 
tacit  backing  of  their  respective  state  departments,  entered 
on  a  campaign  to  secure  the  world's  supply  of  petroleum.  In 
Mexico.  Central  America,  the  Near  East,  Russia  and  the 
United  States  this  struggle  has  been  waged,  and  it  still  con- 
tinues to  be  one  of  the  most  active  contests  for  economic 
power  that  lias  been  fought  in  recent  times. 

Petroleum-hunger  is  only  one  of  the  many  economic  factor.-; 
that  drive  modern  nations.  The  efforts  to  control  the  coal  and 
iron  of  Alsace  and  Lorraine,  the  Saar  and  the  Ruhr  undoubt- 
edly played  a  leading  role  in  making  the  "War  of  1014  and  the 
Peace  of  1010.  The  partition  of  Upper  Silesia  was  based  on 
the  same  contest  for  iron  and  coal.  Wherever  the  co;il  veins 
or  iron  deposits  are.  there,  likewise,  are  gathered  together  the 
representatives  of  industrial  enterprise,  which  depends  for  its 
life  upon  iron  and  coal. 

As  the  resources  of  the  earth  become  better  known,  and 
their  extent  more  definitely  established,  there  is  every  reason 
to  believe  that,  with  the  continuance  of  the  present  economic 
system,  the  necessity  for  exploiting  ih  in  Aviii  become  greater, 
and  the  attempts  to  dominate  them  will  become  more  aggres- 
sive. 


42  THE  NEXT  STEP 

to  continue  the  economic  desolation  and  chaos  under  which 
the  world  is  suffering. 

5.  Distribution  of  the  World's  Wealth 

There  is  another  problem  of  world  scope — the  concentra- 
tion of  wealth  in  a  very  few  countries.  At  the  present  moment 
the  wealth  of  the  world  is  distributed  roughly  as  follows : 

Great  Britain 120  billions  of  dollars 

France 100       " 

United  States  .  ..330 


Total    550  " 

Germany   20  billions  of  dollars 

Russia    40  " 

Italy 25  "         "       " 

Japan 40  " 

Belgium 15  "          "        " 

Argentina    25  "          "       " 

Canada  .                             .  25  "         "       " 


Total    190 

Probably  all  of  the  other  nations  combined  could  not  show 
a  wealth  total  of  more  than  100  billions.  Great  Britain, 
France  and  the  United  States  have  just  about  12  per  cent  of 
the  population  of  the  world,  yet  they  probably  hold  somewhere 
in  the  neighborhood  of  two-thirds  of  the  world's  wealth.  The 
United  States  alone,  at  the  moment,  has  nearly  half  of  the 
world's  gold  supply  and  more1  than  a  third  of  the  world's 
wealth.  Of  course  these  wealth  estimates  are  not  to  be 
accepted  in  detail,  particularly  in  view  of  the  wide  fluctua- 
tions in  the  exchange  rate.  They  serve,  however,  to  give  an 
idea  of  the  relative  wealth  positions  of  the  leading  countries. 


THE  ECONOMIC  MUDDLE  43 

The  present  economic  position  of  the  United  States  in 
particular,  is  a  perilous  one.  The  estimated  wealth  of  the 
United  States  is  greater  than  that  of  the  four  richest  nations 
of  the  world  combined.  Within  a  decade,  the  country  has 
become  the  world's  chief  money  lender,  the  world's  principal 
mortgage  holder,  the  world's  richest  treasure  house.  The 
results  are  inevitable.  The  United  States  will  be  an  object 
of  envy,  jealousy,  suspicion,  cajolery  and  hatred  in  the  eyes 
of  those  peoples  who  concern  themselves  with  the  present 
system  of  competition  for  economic  supremacy.  She  holds 
the  wealth  and  power  that  they  desire  and  they  cannot  rest 
content  until  they  secure  it. 

Past  periods  of  civilization  have  witnessed  the  concentra- 
tion of  wealth  and  power  in  some  great  city,  like  Carthage, 
or  in  some  isolated  region,  like  Italy.  All  around  were  the 
''barbarians" — those  who  had  less  of  the  good  things  of  life 
than  were  at  the  disposal  of  the  citizens  of  the  metropolis. 
"Where  two  of  these  centres  existed  at  the  same  time,  they 
warred  for  supremacy  until  one  or  both  were  destroyed. 

Before  the  war  the  centre  of  the  world's  economic  power 
was  Great  Britain.  To-day  the  economic  centre  has  shifted 
to  the  United  States,  while  Britain  is  still  the  world's  greatest 
political  power.  The  struggle  between  these  two  empires  for 
the  political  suzerainty  of  the  planet  must  continue  until 
one  is  victorious,  or  until  both  have  been  reduced  to  impo- 
tence. 

6.  Thf  Livelihood  Struggle 

Behind  these  struggles  between  various  political  and  eco- 
nomic groups,  there  is  a  broader  reality  in  the  shape  of  a 
billion  and  three  quarters  of  people,  inhabiting  the  surface 
of  the  earth, — people  of  various  races,  religions,  nationalities, 
who.  with  all  of  their  differences,  have  this  in  common  :  that 
they  are  seeking  life,  striving  to  improve  the  opportunities 
for  its  enjoyment,  yearning  for  its  enrichment,  and,  despite 


44  THE  NEXT  STEP 

the  innumerable  disappointments  which  they  have  suffered  in 
the  past,  willing  to  pay  handsomely,  in  vast  and  patient  effort 
for  each  tiny  gain  that  they  secure. 

One  of  the  chief  concerns  of  these  human  multitudes  is 
the  struggle  for  livelihood — for  the  means  of  continuing  phys- 
ical existence  and  of  gaining  the  surplus  and  leisure  out  of 
which  grow  the  higher  life  satisfactions. 

All  men  have  certain  simple  economic  needs — for  food  and 
shelter.  Denied  these,  they  perish.  Given  them,  they  are 
able  to  devote  their  remaining  energies  to  one  of  the  many 
lines  of  activity  that  men  have  developed. 

"What  are  these  other  wants  of  men,  aside  from  the  primi- 
tive needs  for  food  and  shelter?  Most  prominent  is  the  desire 
for  human  companionship,  friendship,  love.  Again,  mankind 
has  accumulated  a  vast  store  of  knowledge,  of  philosophy,  of 
imagery,  of  artistic  expression.  Love,  truth  and  beauty 
sound  an  appeal  that  finds  some  answering  echo  in.  each  life. 
The  leisure  and  the  culture  of  the  world,  in  the  immediate 
past,  have  been  the  heritage  of  a  favored  few :  to-day  they 
are  the  objectives  of  the  many.  Heretofore  it  has 
been  the  belief  of  the  aristocrats  that  the  best  of  life  was 
none  too  good  for  them.  To-day  that  idea  has  spread  among 
the  people.  Dimly,  inarticulately,  they  feel  that  the  world's 
advantages  are  for  them  and  for  their  children. 

Before  the  cultural  advantages  of  life  may  be  enjoyed  by 
the  many,  wealth  must  be  produced,  in  sufficient  quantities 
to  provide  food  and  shelter.  This  provision  of  the  economic 
necessaries  is  not  a  far  goal.  Livelihood,  when  secured,  does 
not  make  of  man  eitli'T  a  saint  or  an  artist,  but  it  is  a  neces- 
sary step  in  the  pursuit  of  cither  goodness  or  beauty.  The 
body  must  be  fed  before  it  will  function,  just  as  the  engine 
must  be  fed  with  fuel  before  it  will  run.  The  provision  of 
a  supply  of  economic  essentials  is  not  the  ultimate  object  of 
life.  Lilt  until  some  such  provision  is  made,  life  in  its  fullest 
terms  is  impossible. 


THE  ECONOMIC  MUDDLE  45 

7.  Guaranteeing  Livelihood 

The  millions  who  inhabit  the  earth  have  a  direct  and 
immediate  interest  in  organizing  economic  life  in  such  a  way 
that  the  supply  of  economic  goods  is  made  regular  and  certain. 
This  is  the  premise  on  which  all  constructive  thinking  about 
economics  is  necessarily  founded. 

How  is  this  hope  to  be  realized?  What  means  are  at 
hand  to  insure  the  ultimate  success  of  these  efforts  to  guaran- 
tee livelihood  .' 

Xature  has  provided  an  ample  supply  of  the  resources  out 
of  which  the  economic  necessaries  may  be  produced.  These 
resources  fall  mainly  into  three  general  classes: 

1.   Climate,  including  those  conditions  of  light,  air,  rainfall 

and  temperature  that  make  possible  the  maintenance  of 

life  in  its  many  forms. 
-.  Fertility,  including  those  qualities  of  the  earth  that  are 

useful  to  man  in  the  pursuit  of  his  economic  activities. 
3.    Power,  including  those  forces  of  nature  which  man  may 

harness  and  compel  to  do  his  bidding. 

Climate,  fertility  and  power  are  variously  distributed  over 
the  earth.  The  heat  near  the  equator  and  the  cold  of  the 
arctic  regions  make  any  highly  organi/ed  forms  of  economic 
life  difficult.  Consequently  it  is  in  the  temperate  zones  that 
industrial  civilizations  have  developed.  The  deposits  of  min- 
erals and  fuels  are  quit'.1  uneven.  Take  iron  ns  an  example. 
Tin1  available  deposits  of  iron  ore  are  concentrated  mainly 
in  lira/il,  Cuba,  the  Appalachians  and  the  flreat  Lake  r.a-iu, 
so  that  the  Americas  and  particularly  North  America  have 
far  more  than  a  proportionate  share  of  the  iron  ore  supply. 
Copper,  coal  and  petroleum  are  distributed  with  even  v:r>'ater 
irregularity.  Equally  uneven  is  soil  fertility.  Inside  a  gar- 
den spot,  like  the  Mississippi  Valley,  lies  a  great  Colorado- 
I  tah  desert.  Nature  has  provided  those  requisites  upon 
which  man  must  depend  for  his  economic  life.  They  are 


46  THE  NEXT  STEP 

scattered  it  is  true,  and  with  the  present  political  barriers 
holding  peoples  apart,  many  of  them  are  politically  unavail- 
able but,  economically,  they  are  an  open  door  to  the  future. 
Men  have  met  with  considerable  success  in  availing  them- 
selves of  nature's  bounty,  and  of  converting  it  into  useful  and 
pleasing  forms.  All  of  the  tools,  weapons,  textiles,  metals, 
wheels,  machines,  have  been  the  result  of  human  effort  and 
ingenuity,  spread  over  long  periods  of  time,  and  gradually 
accumulated  and  concentrated.  At  last  a  day  seems  to  have 
dawned  when  machinery,  applied  to  nature's  bounty,  could 
produce  the  wealth  necessary  to  support  the  world's  exist- 
ing population  on  a  minimum  standard  of  living.  Cer- 
tainly the  energy  and  wealth  which  went  into  the  five  war 
years  would  have  fed  and  clothed  the  people  for  that  period. 

8.  Distribution  and  the  Social  Revolution 

Men  have  succeeded  in  kindling  fires,  making  wheels,  sep- 
arating the  metal  from  the  ore,  harnessing  electrical  power 
and  communicating  their  thoughts  to  one  another  and  to  their 
descendants,  but  they  have  not  made  themselves  masters  of 
those  forces  which  work  through  fire  and  wheels.  Men  have 
mot  the  immediate  economic  problem  by  devising  methods  for 
producing  food,  clothes  and  roof -trees,  but  they  have  been 
overwhelmed  by  the  social  implications  of  these  productive 
forces.  Before  the  problem  of  sharing  the  proceeds  of  their 
labor,  they  have  stopped,  and  the  whole  economic  progress  of 
the  race  now  stands  like  an  engine  stalled,  awaiting  some 
solution  of  the  problems  of  distribution. 

Through  the  ages  various  methods  of  making  a  living  were 
inaugurated  successively.  Mediaeval  Europe  had  worked  out 
a  combination  of  herding,  agriculture,  craft  industry  and 
trade  that  made  a  stable  life  for  an  agricultural  village  a 
practical  possibility. 

This  period  of  economic  stability — this  golden  age — was 
followed  bv  a  series  of  events  that  threw  the  fat  into  the  fire. 


THE  ECONOMIC  MUDDLE  47 

First  in  England,  and  then  in  all  of  the  important  countries 
of  Europe,  the  industrial  revolution  turned  the  simple  graz- 
ing, farming,  craft-industry  life  of  the  village  topsy-turvy, 
by  providing  a  new  method  of  converting  nature's  bounty 
into  goods  and  services  calculated  to  meet  the  increasing 
needs  and  wants  of  mankind.  So  far-reaching  was  the  change 
that  it  has  compelled  a  reorganization  of  virtually  all  phases 
of  social  life,  but  for  the  present  purpose,  it  has  been  felt 
chiefly  in  four  fields :  manufacturing,  commerce,  wealth- 
surplus  and  population. 

The  efficiency  of  the  new  manufacturing  processes  has 
provided  a  large  surplus  of  goods  that  must  be  taken  some- 
where, exchanged  for  food  and  raw  materials,  which  must,  in 
turn,  be  brought  to  the  producers  of  manufactured  goods. 
In  the  course  of  these  transactions,  a  generous  share  of  the 
values  produced  goes,  in  the  form  of  profit,  to  the  owners  of 
the  industry,  another  considerable  portion  goes  into  reinvest- 
ment, thus  swelling  the  volume  of  productive  capital. 

The  increased  wealth,  the  larger  capital  and  the  greater 
amount  of  surplus  all  make  possible  the  maintenance  of  a 
larger  population.  Thus  it  has  come  about  during  the  past 
century,  that  the  production  of  goods,  the  transport  of  goods, 
and  the  population,  have  all  been  increasing  at  a  rate  unheard 
of  during  the  previous  thousand  years. 

The  suddenness  of  these  economic  changes  has  swept  the 
world  away  from  its  accustomed  moorings,  out  upon  an 
uncharted  sea.  Only  yesterday  the  race  was  struggling  to 
make  a  meagre  living:  to-day  the  centres  of  industry  are 
glutted  with  bulging  warehouses  and  equipped  with  idle 
machinery  that  will  produce  unheard  of  quantities  of  shoes 
and  blankets  and  talking  machine  records,  if  the  owners  will 
but  give  the  word  to  the  workers  who  are  eager  to  perform 
those  services  that  yield  them  a  living.  Only  yesterday  the 
world  was  maintained  by  local  production:  to-day  it  depends 
upon  transport  and  exchange.  All  of  these  changes  in  the 


48  THE  NEXT  STEP 

accustomed  ways  and  acts  of  men  have  been  brought  about 
in  the  course  of  an  economic  revolution. 

The  tidal  wave  of  the  industrial  revolution  has  not  stopped 
with  the  economic  world.  No  phase  of  life  has  been  exempt 
from  the  power  of  its  magic.  The  school,  the  church,  the 
family,  the  home,  the  slate,  have  all  felt  its  transforming 
might.  The  aggregate  of  these  changes  is  the  profound  social 
revolution  tluit  has  been  for  some  time,  and  that  is  at  present 
tearing  the  fabric  of  the  old  society  to  tatters,  while  beneath 
its  surface-chaos  is  forming  the  nucleus  of  a  new  social  order. 

9.  A  New  Order 

The  results  of  profound  changes  such  as  those  that  are 
now  occurring,  must  be  chaos  except  in  so  far  as  the  ingenuity 
and  organizing  capacity  of  man  re-establishes  order.  The 
people  in  the  world  are  in  very  much  the  position  of  a  valley 
population  suffering  from  a  disastrous  flood.  Their  houses 
and  fruit-trees — the  product  of  generations  of  labor — have 
been  swept  away.  The  valley  is  filled  with  debris.  .As  the 
water  recedes,  the  wreckage  must  first  be  picked  up,  then  the 
\vhole  population  must  fall  to  with  a  will  and  rebuild  the 
community — put  up  houses,  re-plant  trees,  re-make  gardens, 
repair  roads. 

The  social  revolution  has  not  swept  everything  away,  but 
it  has  modified  the  form  of  social  institutions,  and  some  of 
them,  such  as  the  old  time  farm  home,  the  individual  work- 
shop and  the  agricullural  village  have  been  obliterated  in 
many  localities.  How  shall  the  new  society  be  rebuilt  .'  Only 
as  the  old  was  built — by  the  expenditure  of  human  effort  and 
under  ilic  guidance  of  the  best  wisdom  that  the  community 
can  muster. 

There  arc  a  number  of  points  of  view  from  which  the 
present-da'"  economic  chaos  may  be  regarded.  The  humani- 
tarian I'eels  '>it^  for  the  suffering  and  hardship  imposed  upon 
multitudes  oi  tl:e  world's  population.  The  conservative 


THE  ECONOMIC  MUDDLE  49 

laments  the  alterations  which  are  being  made  in  the  estab- 
lished order.  The  liberal  regrets  that  the  changes  are  occur- 
ring so  rapidly  that  construction  cannot  keep  pace  with  de- 
struction. The  radical  sees,  in  these  fundamental  changes,  the 
dawn  of  his  millennium.  The  scientist  and  the  engineer  upon 
whose  shoulders  will  rest  the.  burden  of  rebuilding  the  new 
society,  tighten  their  belts  and  turn  to  the  mightiest  task  that 
men  have  ever  faced. 

The  economic  muddle  in  which  the  world  now  finds  itself 
is  one  of  many  transition  periods  in  the  history  of  civili/a- 
tion, — a  phase  of  the  great  revolution.  Like  any  period  of 
chaos,  it  is  the  seed-ground  of  the  new  order — the  demolition 
which  precedes  construction. 

Some  day  men  may  be  wise-  enough  and  sufficiently  well 
organized  and  equipped  to  demolish  and  construct  at  the  same 
time.  As  yet  no  such  stage  has  been  reached.  During  the 
intervals  of  chaos  which  separate  two  periods  of  forward 
movement  (the  dark  ages  of  the  world,  as  they  are  sometimes 
called)  the  masses  agonize  and  suffer,  groping  blindly  and 
crying  out  for  guidance.  Such  is  the  period  in  which  the 
world  now  finds  itself. 

Out  of  this  chaos,  men  must  br'nur  order;  and  to  do  this 
they  must  discover  the  foundations  upon  which  the  new  order 
can  be  successfully  built.  This  is  the  work  of  the  engineers, 
the  constructors  of  the  new  society.*' 

10.    T!i'    />Vsp/\    of  IVai'id  lit  (V.'/'N 'rue linn 

Asintics,  Ruropeans,  Africans,  Americans,  Australians — 
all  people  who  follow  the  movement  of  events  realize  that  the 
crisis  confronting  the  capiialisi  world  is  a  serious  one. 
Informed  men  !'':;i  •'.  M.  Keynes  and  Fr:mk  Vanderlip  believe 


50  THE  NEXT  STEP 

that  the  situation  is  perilous.  While  many  persons  see  that 
something  is  wrong,  and  while  some  see  what  is  wrong,  there 
is  a  great  diversity  of  opinion  as  to  the  remedies  that  should 
be  adopted.  What  most  of  the  writers  fail  to  see,  or  at  least 
to  realize,  is  that  economic  organization  is  the  basis — the 
only  possible  basis — for  the  reconstruction  of  the  world. 

The  time  has  passed  when  political  readjustments  wTill 
meet  the  world  situation.  The  events  accompanying  the 
industrial  revolution  have  hammered  the  world  into  a  closely 
knit  economic  whole,  and  until  this  fact  is  understood,  and 
made  the  basis  of  world  thought  and  world  building,  there 
can  be  no  permanent  solution  of  the  world's  problems. 

The  present  chaos  in  world  relations  cannot  be  met  and 
settled  by  war,  legislation,  diplomacy  or  any  similar  means. 
All  of  the  steps  in  these  fields  imply  some  adjustment  of 
political  relationships,  and  it  ic'  the  economic  institutions 
rather  than  the  political  institutions  of  the  world  that  are  in 
need  of  constructive  effort. 

If  a  town  is  suffering  from  a  break  in  the  water-main, 
there  are  two  things  that  may  be  done !  The  old  pipe  may  be 
patched  or  a  new  pipe  may  be  put  in  its  place.  It  is  .some- 
times possible  for  the  engineers  to  patch  the  old  main  tem- 
porarily, while  they  are  getting  in  a  new  one.  The  same 
situation  confronts  the  people  of  the  world.  Their  economic 
life  is  disorganized  and  chaotic.  Shall  it  be  reorganized  along 
old  lines,  slightly  modified  in  the  light  of  experience,  or  shall 
it  be  built  on  fundamentally  different  lines? 


III.  ECONOMIC  FOUNDATIONS 

1.  The  Social  Structure 

"\ViiEX  a  town  or  a  city  decides  to  repair  a  water  system 
or  to  replace  an  old  system  by  a  new  one,  the  plans  are  made 
and  the  work  is  carried  on  in  accordance  with  the  soundest 
principles  known  to  the  engineering;  profession.  There  are 
communities  which  neglect  their  water  systems,  and  which 
suffer  accordingly.  But  for  the  most  part,  the  water  supply 
is  looked  upon  as  so  vital  a  factor  in  the  common  life  that  no 
pains  are  spared  to  have  it  reflect  the  last  word  in  sanitation 
and  efficiency. 

The  same  reasoning  must  apply  to  the  economic  machinery 
upon  which  a  community  depends  for  the  supply  of  its  neces- 
saries and  comforts.  Economic  life  touches  every  home.  Xo 
human  being  who  eats  food,  wears  clothes,  lives  in  a  house, 
rides  on  street  cars  or  reads  papers  and  books  can  escape 
its  ;ill  pervasive  influence.  Therefore  when  changes  are  made 
in  an  established  system  of  economic  life,  or  when  a  new 
economic  system  is  substituted  for  an  old  one.  il  behooves  tin; 
people  concerned  to  sec  that  the  work  of  reorganization  is 
done  in  accordance  with  the  soundest  known  principles  of 
.social  science. 

The  principles  of  social  science,  like  ihe  principles  of 
engineering,  are  mallei's  of  profound  concern  lo  those  who  are 
compelled  to  depend  for  health  and  livelihood  on  ihe  outcome 
of  a  social  experiment.  The  social  scientist  studies  society  as 
the  natural  scientist  studies  nature,  by  examining  the  social 
forms,  the  social  forces,  the  ways  of  handling  or  of  adminis- 
tering these  forces,  and  the  means  of  making  social  improve- 
ments. The  social  scientist,  like  the  scientist  working  in  any 

51 


52  THE  NEXT  STEP 

other  field,  is  concerned  with  making  those  additions  to  knowl- 
edge which  will  prove  of  the  greatest  ultimate  advantage  to 
the  human  race. 

The  principles  of  social  activity  arc  not  yet  so  well  known 
as  those  of  astronomy,  physics,  mechanics  or  biology,  but  they 
operate  none  the  less  surely.  Until  these  principles  are  under- 
stood, and  until  men  plan  their  activities  in  relation  to  them, 
there  will  be  no  possibility  of  a  rationally  organized  and 
wisely  managed  society.  The  physicist  who  planned  a  pump 
on  the  supposition  that  water  is  always  liquid  in  form  would 
get  no  farther  than  the  social  scientist  who  advocated  social 
changes  on  the  theory  that  the  only  motive  that  animated 
mankind  was  the  economic  one. 

Mankind  is  not  wholly  ignorant  of  the  principles  under- 
lying social  structure  and  social  activities.  Philosophers  and 
statesmen  worked  over  them  in  the  ancient  world.  Within  the 
past  two  centuries  a  flood  of  books  and  pamphlets  has 
appeared  dealing  with  social  organization.  To  be  sure,  most 
of  these  publications  have  been  of  a  political  nature,  but  the 
effort  was  made  none1  the  less  to  understand  society  and  its 
workings.  The  investigations,  analyses,  comparisons  and  con- 
clusions are  formulating  themselves  gradually  into  certain 
well-defined  social  laws,  which  men  recognize  as  essential  fac- 
tors it)  social  thinking. 

Some  of  the  more  important  among  these  social  laws  or 
principles  which  have  been  determined  by  the  painful  proc- 
esses of  trial  and  error  are  those  relating  to  the  manner  in 
which  tin1  struct  lire  of  society  is  built  up.  Society  is  not  a 
collection  of  people,  in  the  sense  that  a  basket  of  eggs  is  a 
collection  of  eg<.rs.  Quite  the  contrary,  society  is  a  structure 
forme;!  through  the  association  of  individuals  and  of  groups 
having  some  common  interests  and  some  co-operative  func- 
tions or  activities.  A  family,  for  example,  consists  of  a  num- 
ber of  persons,  usually  connected  by  blood  ties,  living  to- 
gether in  a,  common  dwelling.  A  chamber  of  commerce  con- 


ECONOMIC  FOUNDATIONS  53 

sists  of  individuals,  firms  and  corporations,  doing  business  in 
one  locality,  and  all  concerned  with  the  maintenance  of  cer- 
tain property  rights.  The  British  Miners  Federation  is  com- 
posed of  local  and  of  district  organizations,  which  are  built 
up  around  collieries,  towns,  and  coal  deposits.  The  local 
union  is  composed  of  individual  mine  workers.  The  district 
organization  is  composed  of  a  number  of  locals  in  the  same 
field.  The  federation  is  composed  of  these  lesser  organi- 
zations. No  matter  which  one  of  the  many  forms  of  human 
association  is  examined,  the  same  thing  will  be  found  true. 
Each  social  group  is  composed  either  of  individuals  or  of  lesser 
social  groups  which  have  certain  common  interests  and  certain 
co-operative  activities,  and  which  band  themselves  together  in 
response  to  their  interests  and  in  pursuance  of  these  activities. 
It  is  this  organic  structure,  of  society  to  which  Ilohson  applies 
the  phrase  "the  federal  units  which  society  presents." 
("Work  and  Wealth."  J.  A.  Hohson.  Maemillan.  IfiU.  p.  vi.) 

Among  primitive  peoples  who  have  simple  forms  of  social 
organization,  each  individual  is  connected  with  some  associa- 
tion like  the  clan  or  tribe  which  is  state,  church  and  family, 
all  in  one.  The  stories  of  the  Jewish  patriarchs  arc  good 
illustrations  of  this  stage  in  social  evolution.  "In  advanced 
and  complex  societies,  however,  each  individual  belongs  to  a 
number  of  groups — to  a  town,  a  factory,  a  school,  a  home,  a 
political  party,  a  fraternal  order,  a  church.  TM  complex  soci- 
eties these  groups  are  united  to  form  the  whole  social  struc- 
ture. The  individual  belongs  to  society,  therefore,  because  he 
belongs  to  one  or  more  of  the  groups  composing  society,  and 
his  membership  in  society  is  dependent"  upon  his  i;i<-rnhei-ship 
in  a  social  group. 

Without  making  too  much,  of  the  comparison  between  a 
living  organism,  like  the  human  body,  ami  a  society,  the  simi- 
larities between  the  two  are  striking.  '  y  con- 
sists of  various  systems,  such  as  the  circulatory  system,  the 
nervous  svsiem,  the  digestive  svstem.  Each  oi!  these-  svstem.s 


54  THE  NEXT  STEP 

is  composed  of  many  parts,  having  separate  functions  to 
perform.  The  circulatory  system,  for  example,  consists  of  the 
heart,  veins,  arteries,  capillaries,  the  blood,  etc.  These  various 
parts  of  each  system  are  in  their  turn  made  up  of  different 
kinds  of  tissue.  The  heart  is  a  complicated  organ  consisting  of 
muscle  tissue,  nerve  fibers,  blood  vessels,  etc.  Muscles,  nerves 
and  blood  vessels  are  in  their  turn  composed  of  living  cells, 
each  of  which  contains  the  mechanism  of  a  life  cycle.  Among 
the  unit  cells,  the  various  tissues,  organs  and  systems  of  the 
body,  there  is  a  working  harmony.  The  whole  complex 
machine  functions  in  unison.  If  one  of  the  organs  fails  to  do 
its  work. — if  the  heart  fails  to  pump  blood  or  if  the  lungs  fail 
to  inhale  oxygen, — the  whole  body  ceases  to  function  or  "dies." 

Throughout  the  scries,  from  the  single  cell  to  the  entire 
organism,  the  human  body  is  built  up  compositely.  This 
method  of  composite  structure  holds  equally  true  in  the  com- 
position of  modern  society. 

A  modern  society  or  community  consists  of  various  sys- 
tems, such  as  the  educational  system,  the  economic  system,  the 
political  system.  Each  of  these  systems  is,  in  its  turn,  com- 
posed of  institutions.  Thus,  for  example,  the  educational 
system  consists  of  the  common  schools,  the  high  schools,  the 
normal  and  professional  schools  and  universities,  the  special 
schools,  and  so  on.  Eacli  city  school  system  is  a  going  con- 
cern with  its  pupils,  teachers,  officials,  school  buildings,  text- 
hooks,  courses  of  study.  Each  school  building,  each  class 
room,  each  group  of  pupils,  is  a  social  unit,  composed  either 
of  individuals  or  of  groups.  Like  the  single  cell  of  the  human 
body,  the  individual  pupil  is  a  living  organism,  and  it  is  out 
of  a  multitude  of  such  organisms  variously  grouped  that 
school  systems  are  built. 

The  social  machinery,  like  the  machinery  of  the  body,  must 
work  smoothly,  otherwise  misery  will  be  the  inevitable  result. 
Tf  the  educational  or  the  economic  life  of  a  community  breaks 
down,  the  whole  communitv  suffers,  as  does  the  bodv  through 


ECONOMIC  FOUNDATIONS  55 

the  failure  of  an  important  organ.  If  the  stoppage  is  sig- 
nificant enough,  as  for  example,  a  stoppage  of  the  economic 
machinery  like  that  experienced  by  central  Europe  since  1919, 
the  social  organism  "dies," — that  is,  it  is  resolved  into  its 
constituent  elements,  some  of  which  may  disappear. 

Those  who  object  to  the  comparison  between  society  and 
a  living  organism  like  the  body,  find  more  satisfaction  in 
likening  the  social  machine  to  an  automobile,  with  its  self- 
starter,  its  ignition  system,  its  lighting  system,  its  steering 
gear,  its  driving  mechanism.  Each  of  the  systems  is  in  turn 
composed  of  parts.  Each  part  is  made  of  wood,  iron,  copper, 
rubber,  and  these  materials  are,  in  turn,  composed  of  mole- 
cules and  atoms  in  certain  combination.  The  automobile  is 
not  self-acting,  like  the  body  or  like  society,  but  the  failure 
of  one  of  its  essential  parts  like  the  ignition  system,  means 
the  failure  of  the  whole  machine. 

Society,  like  the  human  being,  or  like  the  engine,  is  a 
highly  complex  mechanism,  and  like  them  it  cannot  function 
successfully  unless  its  various  parts  function  in  harmony. 
The  major  problem  before  a  society  is  therefore  the  working 
out  of  a  system  of  inter-relations  between  its  parts,  that  will 
make  harmonious  functioning  possible  and  easy.  Just  as  the 
mechanical  engineer  who  builds  the  automobile  puts  into  it 
the  results  of  his  wisdom  in  an  effort  to  make  it  effective,  so 
the  social  engineer  devotes  himself  to  the  problem  of  making 
society  function  in  the  way  that  will  yield  the  largest  results 
to  the  individuals  composing  it. 

2.  Specialisation.  Association.  Co-operation 

Every  social  group  except  the  horde,  which  is  an  aggrega- 
tion of  unspecialized  and  non-co-operating  individuals,  is  con- 
structed on  the  principle  of: 

1.  Specialization 

2.  Association 

3.  Co-operation 


56  THE  NEXT  STEP 

The  social  group— the  family,  the  school,  the  factory- 
takes  upon  itself  the  performance  of  a  particular  social  func- 
tion— it  specializes  itself.  Each  group  associates  itself  with 
other  groups — families  with  families,  schools  with  schools,  fac- 
tories with  mines  and  stores.  Finally,  these  associated  groups 
work  together  or  co-operate,  exchanging  the  products  which 
their  specializations  have  created,  and  uniting  their  efforts  in 
the  furtherance  of  their  commmon  interests.  These  develop- 
ments take  time,  and  some  communities  are  more  highly  spe- 
cialized than  others,  but  all  societies  which  enter  intimately 
into  the  life  of  the  modern  world  are  thus  constituted. 

The  more  advanced  the  society,  the  more  numerous  and  the 
more  complex  are  the  relations  between  its  component  parts. 
The  agricultural  inhabitants  of  the  Ganges  Delta  have  evolved 
a  far  more  complex  society  than  that  of  the  aborigines  of 
Australia,  but  Ihe  civilization  at  the  mouth  of  the  Ganercs  is 
simplicity  itself  compared  with  that  of  Britain,  Belgium  or 
Japan.  Tn  the  Ganges  Delta  each  family  group  has  a  home- 
stead. Outside  of  the  homestead,  the  community  life  is  almost 
wholly  unspeeialized.  Even  whore  the  hom"steads  are  clus- 
tered together  there  are  no  stores,  no  recreation  centres,  and 
few  churches  or  schools  except  in  the  larger  towns  or  in  the 
market  towns,  of  which  there  are  a  very  few.  since  only  about 
one  per  cent  of  the  people  live  in  towns  or  cities.  Practically 
rho  entire  population  is  occupied  wit  I1,  the  work  of  the  home- 
stead, and  the  work  of  each  homosl<->ad  is  very  like  the  work 
of  every  other  homestead.  ("The  Economic  Life  of  a  Ben  era  1 
District."  J.  C.  Jack.  Oxford.  Clarendon  Press.  1916. 
pp.  1  to  40.) 

"Flow  different  is  the  French.  German  or  Italian  village, 
with  its  various  crafts,  trades,  professions,  industries,  recrea- 
tion centres,  schools,  churches  and  the  like.  Every  such 
Europe;])]  community  of  threo  or  four  thousand  persons  is  in 
itself  a  complex  society,  while  the  industrial  city  of  fifty  thou- 
sand people  is  a  hive  of  related  social  activity. 


ECONOMIC  FOUNDATIONS  57 

The  more  highly  specialized  the  group,  the  more  complex, 
intricate  and  precise  are  its  workings. 

This  principle  of  social  federation  through  specialization, 
association  and  co-operation  is  nowhere  better  illustrated  than 
in  the  case  of  the  present  economic  system.  In  each  centre 
of  population,  in  each  town  or  city,  in  each  state,  in  each 
nation,  in  the  world  at  large,- — the  economic  system  is  divided 
into  various  elemental  economic  groups  or  units,  falling  under 
six  main  headings : 

1.  The    extractive   units,   which   are   concerned    with   the 
taking  of  wealth  from  nature's  storehouse — the  farm, 
the  mine,  the  lumber  camp. 

2.  The  fabricating   units,    which   are   busy   changing   the 
products  of   farm,   mine   and   lumber-camp   into  semi- 
finished or  finished  forms — the  mill,  the  smelter,  the 
factory. 

3.  The  transportation  units,  which  carry  goods  or  people 
or    messages    from    place    to    place — railroads,    ships, 
trucks,  telephones. 

4.  The    merchandising   units,    which    assemble    the    goods 
turned  out  by  the  fabricators  and  distribute  them  to  the 
users,  wholesalers,  jobbers,  retailers. 

5.  Personal  service  units,  which   render  a   service  to  the 
consumer  in  some  direct,  personal  way — housekeepers, 
educators,  entertainers,  health  experts. 


net-work  of  economic  inter-rela 
vided  into  individual  'plants,  factories,  departments  and  the 
like.  Take,  as  an  example,  one  group,  the  manufacturing 
industries  of  the  Tniied  States.  "When  the  Census  of  1014 
was  compiled,  the  manufacturing  industries  were  classed  in 


58  THE  NEXT  STEP 

fourteen  groups, — food  and  food  products,  textiles,  iron  and 
steel  and  their  products,  lumber  and  its  remanufactures,  etc. 
There  were  496,234  wage-earners  working  in  59,317  food  and 
food  products  establishments,  1,498,644  wage-earners  in 
22,995  textile  establishments,  1,061,058  individuals  working  in 
17,719  iron  and  steel  establishments,  and  so  forth.  Each  of 
the  fourteen  subdivisions  of  the  manufacturing  industries  of 
the  United  States  employ  hundreds  of  thousands  of  men  and 
women  who  are  at  work  in  tens  of  thousands  of  establishments 
in  thousands  of  cities  and  town.  The  same  kind  of  specializa- 
tion is  to  be  found  throughout  the  various  modern  industries, 
and  in  the  different  industrial  countries. 

Each  one  of  the  larger  establishments — each  factory  or 
plant — is  in  turn  composed  of  departments,  divisions,  shops 
and  the  like. 

"Whether  the  individual  establishment  or  the  individual 
department  be  regarded  as  the  unit  of  economic  activity,  the 
outstanding  feature  of  the  manufacturing  industry  is  the 
immense  number  of  units  that  must  be  in  working  order  and 
co-operating  harmoniously  with  the  others  before  the  whole 
can  function  smoothly.  And  this  is  but  one  of  the  general 
divisions  of  industry.  At  the  time  of  the  Census  of  1920 
there  were  in  the  United  States  alone.  6,447,998  farms;  in 
1914  there  were  275,701  manufacturing  establishments;  in 
1910  there  were  1J 27,926  retail  dealers  and  50.123  whole- 
sale dealers.  Literally,  there  are  millions  of  productive  eco- 
nomic units  in  this  one  country  which  are  specialized,  which 
are  associated  in  their  activities  and  which  must  be  pnt  on 
a  co-operative  basis  if  effective  results  are  to  be  obtained  from 
them. 

3.  Three  Lines  of  Economic  Organization 

So  much,  then,  for  the  interdependence  of  the  various 
economic  groups  under  the  present  forms  of  society.  This 
interdependence  runs  throughout  the  capitalist  system. 


ECONOMIC  FOUNDATIONS  HO 

Farms  depend  on  railroads,  railroads  on  mines,  mines  on  fac- 
tories, factories  on  farms,  and  so  on. 

This  extreme  specialization  of  the  economic  system  is  the 
product  of  the  past  two  hundred  years,  the  outcome  primarily 
of  the  industrial  revolution.  The  experience  of  society  with 
these  specialized  economic  forms  does  not,  therefore,  extend 
over  more  than  five  or  six  geiicrations.  This  experience  is 
sufficient,  however,  to  indicate  that  there  are  three  general 
lines  along  which  economic  organization  may  develop: 

1.  Economic  "states  rights"  or  individualism — the  theory 
upon  which  the  present  day  industry  as  well  as  the 
modern  state  was  founded.     Under  this  theory  each 
economic  group  must  be  free  to  go  its  way,  cutting  a 
path   for   itself  through  the  ranks  of  its   competitors, 
and   making  its  triumphant   advance  over  their  pros- 
trate remains. 

2.  Economic  bureaucracy,  involving  the  concentration  of 
economic  authority  in  the  hands  of  a  centralized  group 
which,  knowing  little  or  nothing  about  the  requirements 
of  particular  localities,  is  nevertheless  in  a  position  to 
legislate  for  them  and  to  enforce  its  mandates. 

3.  Economic  federation  or  federalism,  with  local  groups 
enjoying  local  autonomy  in  all  local  matters,  and  only 
so   much    centralized    control    as    is    necessary   for    the 
unified  direction   of  the  entire  enterprise. 

American  industry  has  had  considerable  experience  with 
the  two  first  forms  of  organization.  Until  the  period  of  the 
Civil  War.  competition  was  the  generally  accepted  rule  in 
all  phases  of  economic  life.  With  the  formation  of  the 
Standard  Oil  Company  in  1P70.  a  new  principle  was  demon- 
strated, and  the  idea  of  centralization  was  embodied  in  a 
form  that  served  as  the  model  for  the  American  trust  move- 
ment. "By  the  time  of  the  late  nineties,  this  principle  of 
centralization  had  been  carried  so  far  that  a  reaction  set  in, 


60  THE  NEXT  STEP 

and  when  the  United  States  Steel  Corporation  was  organized 
in  1901  local  autonomy  was  recognized  as  one  of  the  essential 
principles  around  which  its  structure  was  built. 

Experience  points  to  the  system  of  local  autonomy  in 
local  matters  and  to  the  central  control  of  general  matters 
as  the  most  workable  in  a  complex  society. 

In  the  first  instance,  under  such  a  system,  each  local 
unit  is  responsible  for  its  own  activities  and  for  its  own 
discipline.  It  is  obvious  that  no  matter  how  efficient  the 
bureaucracy,  it  would  hardly  be  possible  for  a  centralized 
authority  to  control,  from  one  point,  the  six  millions  of  farms 
and  the  quarter  million  industrial  establishments  of  the 
United  States.  It  is  only  where  the  handling  of  local  matters 
rests  with  those  immediately  concerned  that  the  highest  degree 
of  local  pride,  initiative  and  energy  can  be  generated  and 
maintained. 

Such  a  system  leaves  the  central  authority  free  from  detail 
,so  that  it  may  devote  all  of  its  energies  to  decisions  on 
matters  of  general  policy,  and  to  such  procedure  as  affects  the 
welfare  of  the  whole  rather  than  of  ar.y  particular  part. 
Economic  society,  to  be  organized  successfully,  must  be  built 
of  units  that  will  prove  self-acting  and  self  -directing  in  all 
matters  of  purely  local  concern.  At  the  same  time,  a  scheme 
of  economic  life  must  be  devised  that  will  make  it  ca>y  and 
natural  for  these  economic  units  to  function  co-operatively 
in  all  maters  connected  wiih  tli"  well-ben:::'  of  the  whole 
industr  or  of  the  whole  economic  societ. 


Much  has  been  done  to  organize  the  economic  life  of  the 
planet.  particularly  during  1  he  pa>t  two  centuries.  Prior  to 
the  industrial  revolution  the  economic  life  of  the  masses  of 
the  people,  with  the  exception  of  a  lit  lie  trading  and  shipping, 
was  localized  and  individualized  in  the  village,  the  commune, 
the  homestead  and  the  home.  The  industrial  revolution,  with 


ECONOMIC  FOUNDATIONS  61 

its  dependence  upon  mechanical  power,  served  to  concentrate 
economic  l;fe  in  larger  units — the  factory,  the  plant,  the 
industrial  city.  As  a  matter  of  necessity,  organization  fol- 
lowed in  the  wake  of  this  concentration.  The  owners  of 
industry  organized  on  the  one  side :  the  workers  organized 
on  the  other.  Besides  these  two  major  forms  of  organization 
within  the  field  of  industry,  there  was  the  organization  of  the 
state,  which  has  played  a  leading  role  in  1he  life  of  present- 
day  society. 

The  organization  of  the  owners,  which  is  far  more  complex 
and  more  highly  developed  than  that  of  the  workers,  has 
followed  four  general  lines: 

1.  The    organization    of    one    line    of    industry.      "Woolen 
mills  in  Massachusetts  and  in  New  York  unite  to  form 
the  American  Woolen   Company:   sugar  refineries  are 
consolidated      into      the      American      Sugar      Refining 
Company. 

2.  The   organization    of   those   industries   which   are    con- 
cerned with  the  turning  out  of  one  product — industrial 
integration.      The  iron   ore  beds  of  Michigan.   1he  coal 
and  coke  industries  of  Pennsylvania,  lime-stone  quar- 
ries, smelters,  converters,  rolling-mills,  railroad  oonnec- 
tiifns    and    selling    organizations     all     unite    into     the 
Cambria  Steel  Company  or  the  Carnegie  Steel  Company. 
Timber  tracts,  ore  properties,   mills,  mines  and   selling 
agencies-     join    to    form    the     International     Harvester 
Company, 

3.  The  organization  of  unlik'1  and   unrelated   in 
manufacturing    industries,    public    utilities, 
companies,      railroads,     trust      companies 
brought    u;--!"r    the    financial    control    of 
Company  or  of  some  other  banking  syndi 

4.  The  handing  tic'-ther  <>f  these  vannus  group 
welfare    associations    such    as    chambers    of 
boards  of  trade,  manufacturers'  associatio 


62  THE  NEXT  STEP 

Xone  of  these  organizations  has  any  primary  interest  in 
geographic  areas  or  in  national  boundaries.  Half  of  the 
business  of  the  Standard  Oil  Company  of  Xew  Jersey  is 
carried  on  outside  of  the  United  States:  the  International 
Harvester  Company  puts  up  plants  in  Canada  and  in  Russia ; 
United  States  Steel  buys  properties  in  Mexico ;  The  Xational 
City  Bank  opens  agencies  in  Cuba  and  in  Argentina.  The 
great  modern  business  units  deal,  not  with  political  boundaries, 
but  with  economic  areas.  They  seek  out,  as  the  field  for 
their  operations,  abundant  resources,  cheap  labor,  attractive 
markets. 

The  present  economic  system  has  made  great  strides 
toward  the  world  organization  of  economic  life  in  a  compara- 
tively short  time.  Australia,  Canada  and  the  United  States 
furnish  excellent  illustrations  of  the  way  in  which  continents 
have  been  surveyed,  spanned  with  steel,  populated  and 
exploited  in  three  or  four  generations.  So  completely  has 
the  economic  system  been  altered  that  the  seventeenth  century 
world  would  not  recognize  its  infant  great-grandson  of  the 
twentieth  century. 

o.     Limitations  on  Capitalism 

Important  changes  have  been  made  in  the  structure  cf 
society  since  the  inauguration  of  the  present  economic  system, 
but  these  changes  have?  not  been  radical  enough  to  keep  pace 
with  the  still  more  radical  changes  that  have  occurred  in  the 
mechanism  of  economic  production  and  exchange.  The  chief 
failure  of  the  present  order  is  its  failure  to  readjust  social 
machinery  in  conformity  with  the  economic  chancres  that  have 
occurred  in  society,  and  this  failure  is  due.  in  large  measure, 
to  the  limitations  contained  within  tin1  capitalist  system. 

Like  all  social  systems  which  attain  to  positions  of  conse- 
quence, the  capitalist  system  has  played  an  important  role  in 
the  development  of  society,  and  like  all  such  systems,  it  has 
had  its  dav.  The  needs  of  the  communitv  have  advanced  to 


ECONOMIC  FOUNDATIONS  63 

a  point  at  which  they  cannot  be  met  under  capitalism,  whose 
chief  failure  to  function  more  effectively  in  the  present  crisis 
may  be  traced  to : 

1.  Excessive  centralization  of  the  determining  control  of 
industry  in  the  hands  of  financial  manipulators,  who 
do  not  even  enjoy  the  advantage  of  owning  the  indus- 
tries which  iheij  dominate. 

Through  shrewd  financial  dealing  they  have  maneuvered 
themselves  into  positions  of  importance,  which  they  hold 
because  of  their  ability  to  manipulate,  a  political  rather  than 
an  industrial  virtue.  The  necessary  result  of  this  concentra- 
tion of  authority  is  a  denial  of  local  self-determination  and 
a  corresponding  loss  of  local  initiative.  The  less  local  initia- 
tive there  is,  the  more  centralization  is  require;!  to  keep  the 
machinery  running,  until  a  point  is  reached  where  all  power 
and  authority  are  exercised  from  the  centre,  and  the  local 
group  is  as  devoid  of  spontaneity  as  it  is  of  authority.  At 
somewhere  about  this  point,  the  friction  involved  in  adminis- 
tration becomes  so  great  that  the  whole  of  the  social  energy 
is  consumed  in  the  routine  of  keeping  the  social  machinery 
running,  and  there  is  no  surplus,  either  for  leisure  or  improve- 
ment. Tin's  was  the  outcome  of  a  similar  centralization  of 
authority  under  Feudalism,  and  it  shows  itself  in  any  organi- 
zation that  permits  itself  to  drift  into  the  danger-zone  of 
bureaucracy. 

2.  A   second  obstacle  to  tin   further  development  of  the 
present  economic  system  is  nationalism. 

The  political  state  has  become  an  adjunct  to  the  capitalist 
economic  system.  It  relies  for  one  of  its  sources  of  driving 
power  upon  a  concept  of  nationalism  "which  places  the  political 
boundary  lines  that  happen  to  surround  a  people  fir>t  among 
the  public  limitations  on  conduct.  "My  country,  ri<rht  or 
wrong."  becomes  a  catch  phrase  on  the  lips  of  school  children. 
Whatever  transpires  inside  these  political  boundary  lines  is 


6-i  THE  NEXT  STEP 

sanctified  by  its  association  with  the  fatherland,  while  events 
having  their  origin  outside  of  the  country  must  be.  corres- 
pondingly discounted. 

Since  the  middle  of  the  nineteenth  century  the  business 
men  of  every  great  industrial  nation  have  been  compelled  to 
go  abroad  for  raw  materials,  for  markets  and  for  investment 
opportunities.  In  order  to  obtain  these  economic  advantages, 
the  citizens  of  the  civilized  nations  have  not  hesitated  to 
plunder  the  natives,  and  if  they  resisted,  to  murder  them — as 
Britain  has  done  in  India,  as  Belgium  has  done  in  the  Congo, 
as  Japan  has  done  in  Korea,  as  the  United  States  has  clone 
in  the  Philippines  and  Ilayti.  This  robbing  and  murdering 
is  sanctified  by  the  fact  that  "our  interests  were  in  danger" 
or  that  "our  flag  was  fired  upon"  or  that  "our  citizens  have 
lost  lives  and  property."  But  during  the  past  few  decades 
the  exploiting  nations  have  found  more  than  natives  to  deal 
\viih.  In  almost  every  instance  there  have  been  at  least  two 
claimants  for  each  choice  economic  morsel,  and  a  conflict  has 
frequently  resulted,  like  that  between  Russia  and  Japan  for 
the.  control  of  Kastern  Asia  or  between  Germany  and  France 
for  the  control  of  the  iron  and  coal  deposits  of  Western 
iMimp!'.  In  such  cases  the  wars  are  justified  to  the  home 
populations  as  necessary  defensive  measures. 

The  justification  may  or  may  not  be  complete,  but  the  bills 
musf  be  paid,  and  they  have  proved  to  be  inordinately  high. 
The  cost  of  kill'i!:'.:  African  natives  or  unarmed  Ilaytians  is 
vely  low,  but  the  cost  of  lulling  Frenchmen  and 
-  enormous.  If.  as  some  experts  have  estimated,  the 
i  of  the  Civat  War  was  2."0  billions  of  dollars,  and 
if  only  10  millions  were  killed,  it  cost  something  like  $25". 000 
to  kill  each  oi'  the  ten  millions.  It  is  at  this  point  that 
down  because  of  the  sheer  inability  of  the 
•  the  bills  that  have  been  contracted  in  destrov- 


ECONOMIC  FOUNDATIONS  65 

beyond  boundary  lines  of  a  nation  are  so  great  that  the  people 
who  do  the  country  ?s  work  cannot  or  will  not  meet  them,  the 
end  of  the  system  that  depends  upon  expansion  is  already 
in  sight.  That  point  has  been  reached  and  passed  in  capitalist 
society. 

While  the  costs  of  expansion  were  merely  the  cost  of 
subduing  naked  savages,  the  business  was  a  remunerative  one ; 
but  when,  to  these  ordinary  costs  must  be  added  the  stu- 
pendous price  of  capturing  trenches  protected  by  barbed  wire 
entanglements,  of  bombing  whole  countrysides,  of  desolating 
states  and  wiping  out  industries,  not  to  mention  the  cost  of 
building  forty  million  dollar  ships  that  can  be  sunk  in  six 
or  seven  minutes  with  one  well  aimed  torpedo,  the  limit  has 
been  reached,  and  bankruptcy  sooner  or  later  ensues.  Capi- 
talism is  now  paying  that  price  throughout  most  of  Europe. 

3.  A  third  obstacle  to  the  continuance  of  the  capitalist 

system-  lies  in  the  fact  that  it  has  fallen  into  the  hands 
of  profiteers  (bankers  and  absentee  owner*)  -whose  chief 
purposes  are  to  control  ccono)nic  machinery  for  the 
money  there  is  in  it,  and  to  yuaranlte  their  clients 
(investors)  an  opportunity  to  Hue  without  workinr/  on 
the  labor  of  others. 

By  the  very  nature  of  their  connections  the  managei's 
of  industry  are  denied  the  right  t«  think  in  economic  I'Tins. 
Their  function  is  to  "make  money"  by  exploiting  nature 
and  men.  They  are  then-fore  profiteers  rather  lhan  pro- 
ducers, and  no  economic  system  can  hope  to  swvivc  unless  it 
is  based  on  production  rather  than  pron'rer;!:-:. 

4.  Th.r  nrcspnt  economic  svsiem   is  in  tin    h-!;><l: 

'         '       ?<•;•*) 


66  THE  NEXT  STEP 

on  all  questions  of  industrial  policy.  Their  interest  is  a 
property  interest.  Automatically  they  are  precluded  and 
prevented  from  thinking  or  acting  in  the  interest  of  the 
general  welfare,  since  their  clientele,  which  is  seeking  to  live 
on  the  labor  of  the  masses  of  their  fellow  citizens,  is  only  a 
minute  part  of  the  general  public. 

5.  There  is  another  limitation  arising  out  of  the  third  and 
fourth,  just  enumerated — the  limitation  imposed,  -upon 
the  whole  of  society  by  the  incessant  struggle  between 
the  owners  of  industry  and  the  workers  in  industry. 

While  the  owning  class  continues,  without  labor,  to  derive 
an  income  from  the  labor  of  the  workers,  the  former  will  grip 
their  privileges,  while  the  latter  will  oppose,  obstruct,  attack 
and  ultimately  deny  the  rights  of  the  owners. 

These  five  limitations :  centralization,  nationalism,  profit- 
eering, the  handling  of  economic  affairs  in  the  name  of 
property  rather  than  in  that  of  human  welfare,  and  the  class 
struggle — make  it  difficult  or  impossible  for  the  directors  of 
the  present  economic  system  to  extend  it  in  response  to  the 
pressing  demand  for  expansion.  Like  other  social  systems 
that  have  prevailed  in  historic  times,  the  capitalist  system  of 
economic  control  has  its  limitations,  and  like  many  another 
sys1»m,  it  seems  to  have  reached  them. 

6.     The   Growth   of  Capitalism 

The  existing  economic  order  has  grown  to  its  present  pro- 
portions competitively  and  nationalistically,  without  any  cen- 
trali/"d  supervisory  control   (without  any  board  of  strategy) 
just  as  one  of  the  Canadian   cities  out  upon  the  plains  has 
grown,  or  rather  sprawled  over  the  prairie — each  man.  build- 
ins1  how  and  when  and  win-re  he  liked,  each  industry  choosing 
its  own  location,  stores,  schools,  churches,  theatres,  squatting 
i    rhf'Nf>  points   that  seemed  to  be  the  centres  of  the  crowd 
iie.    Mines  have  b'vn  opened,  factories  established,  railroads 
huilt.    electric    plants    constructed,    bv    some    individual    or 


ECONOMIC  FOUNDATIONS  67 

corporation  interested  in  making  a  profit  on  the  investment, 
and  with  little  or  no  relation  to  the  well-being  of  the  commu- 
nity. There  has  been  no  recognized  intelligent  guidance 
behind  the  development  of  the  industrial  system. 

In  so  far  as  the  present  economic  life  was  planned,  it  was 
planned  locally,  by  the  directors  of  one  industry,  by  the 
chamber  of  commerce  of  some  city,  by  a  far-sighted  banker 
or  financier  who  insisted  upon  thinking  in  terms  of  the  coming 
business  generation.  For  the  most  part  the  system  grew, 
however,  like  stalks  of  corn  in  a  field,  each  stalk  drawing  its 
own  nourishment  from  the  soil  and  making  what  progress  it 
could  along  its  own  path  toward  the  zenith. 

Another  serious  drawback  in  the  growth  of  the  present 
economic  system  is  that  much  of  it  was  developed  as  an  under- 
ground organization.  Even  had  they  decided  to  do  so.  indi- 
vidual business  men  have  not  been  free  to  plan  ahead  and 
work  out  a  business  policy  in  the  light  of  day.  On  the  one 
side  were  the  jealous  competitors  watching  every  move  and 
eager  to  profit  by  any  bit  of  information  that  they  could 
secure  with  regard  to  the  plans  of  their  rivals  On  the  other 
side  was  the  government,  with,  its  conspiracy  laws  and  its 
anti-trust  laws,  ready  to  swonp  down  on  the  business  director 
who  planned  too  broadly  or  thought  too  far  into  the  future. 
Then,  too,  there  was  an  ever-growinu'  force  in  a  public  opinion, 
that  was  suspicious  of  profiteers,  no  matter  what  their  profes- 
sions. "With  competitors  on  the  watch  here,  and  irnvernmeiit 
officials  yonder,  there  was  nolhini:  for  it  but  to  wurk  in  secret, 
to  shadow  the  new  policies  in  mystery  and  to  gel  as  far  as 
possible  without,  heiucr  found  out. 

Far-reaching  change-;  have  taken  place,  of  late,  in  the 
type  of  men  who  have  held  the  reins  of  control  over  industry. 
During  its  early  years  the  economic  machinery  was  con- 
structed by  men.  v-.ho  had  worked  at  their  trades;  men  who 
had  boirun  at  the  bottom  and  climbed  into  a  place  of  authority; 
men  who  had  a  fir-M-ham!  knowr'dire  of  the  processes  under- 


68  THE  NEZT  STEP 

lying  their  industries.  Latterly,  however,  with  bankers  and 
other  professional  manipulators  in  control  of  economic  life, 
the  engineers,  with  their  intimate  knowledge  of  forces  and 
processes  have  been  pushed  into  the  background,  and  "the 
actual  work  of  direction  has  been  shifted  from  producers  to 
money  makers. 

Again,  the  present  economic  system,  built  for  the  profit 
of  the  builder  rather  than  for  the  welfare  of  the  community, 
represents,  not  the  science  of  organization  for  production 
and  use.  but  the  science  of  organization  for  exploitation  and 
profiteering. 

These  are  some  of  the  reasons  why  the  economic  life  of 
the  modern  world  has  grown  at  haphazard.  Each  industrial 
din-dor  put  his  own  ideas  into  his  business,  and  as  it  grew 
in  response  to  them,  the  various  businesses  differed  as  much  in 
shape,  size  and  character  as  did  the  early  factory  buildings. 

The  time  seems  to  have  arrived  when  a  new  working  plan 
of  economic  life  may  be  adopted.  The  faults  and  failures 
of  the  old  arc  glaring  and  the  clamor  for  the  new  is  reasonable 
and  insistent. 

The  construction  of  factory  buildings  has  been  evolved 
into  a  science.  AVliy  cannot  the  same  thing  be  dene  with 
tlif  whole  scheme  of  economic  organization?  Men  no  longer 

ct    factory    buildings    according   to    personal   whim   or   to 

the   chance   ideas   of  some  budding  architect.     Instead   they 

scientists  in   factory  construction  who  have  devol  -1 

years  to  the  study  and  to  the  practical   supervision  of   the 

detail    of   factory   buildin'.:'.      Can    less   be   demanded    of   the 

fommnnity  which  hopes   to   build   its   economic   life   soundly 

f]  solidly  2 

A    modern    steel    plant,    like   that    at    Gary,    Indiana,    is 

carefully  planm  d  •   'fore  a  sod  is  turned.    The  organization  of 

llio   woiks   i>   ihov.^iit   out.   sketched,   drawn   in   detail,   blue- 

•  L  group  i      v,  orkers  \  hat  part  ici]  >at  es  in 

the  construction  is  given  a  blue  print  that  snecines  what  is 


ECONOMIC  FOUNDATIONS  69 

to  be  done,  and  where  and  how.  "When  all  of  the  tasks  are 
completed  a  steel  plant  has  been  called  into  being.  But 
suppose  that  each  of  the  eight}*  gangs  of  workers,  busy  on 
the  plant,  had  followed  the  lines  of  its  fancy  or  of  its  own 
special  interest !  The  result  would  resemble  the  helter-skelter 
of  modern  economic  society. 

7.     Effective  Economic  Units 

Economic  life  has  been  haphazard  in  the  past.  In  the 
future  it  will  be  one  of  the  most  scientifically  built  of  all 
human  institutions.  It  is  so  vital  a  prrt  of  the  social  life, 
and  it  yields  itself  so  readily  to  structural  co-ordination 
that  the  best  structural  minds  will  turn  to  it  perforce,  as  the 
logical  field  for  their  activities. 

The  economic  structure  of  the  future,  to  be  sound,  must- 
be  built  of  effective  working  units.  It  is  as  impossible  to 
build  a  live  social  system  with  dead  component  elements 
as  it  is  to  build  a  live  body  with  dead  cells. 

At  least  for  the  time  beiua1,  an  intricate  and  complicated 
structure  is  needed  to  handle  the  problem  of  livelihood.  As 
time  goes  on.  Ihe  nature  of  the  economic  system  m;iy  lie 
greatly  modified,  and  its  structure  simplified  correspondingly. 
While  the  complicated  economic  structure  remains,  however, 
the  problem  will  be  one  of  co-relating  the  activities  of  vast- 
numbers  of  economic  units,  and  of  prevailing  on  them  to 
function  with  less  friction  and  greater  harmony. 

Like  every  social  structure,  the  economic  system  will  be 
built  up  of  lesser  social  groups,  begin ninu-  with  the  simplest 
local  body  of  fanners,  miners  or  mill  work"rs.  and  continuing 
on,  by  successive  stages  of  organization  to  the  largest  and 
most  higlny  complex  irronps  in  the  community. 

The  nature  of  each  of  the  units  that  enters  into  the 
economic  structure  must  vary  with  the  locality,  with  the 
industry,  and  so  on.  hence  it  will  prove  to  be  impossible  to 
lav  down  anv  arbitrarv  rules  concerning  their  organization. 


TO  THE  XE::T  STEP 

It  is  possible,  however,  to  suggest  certain  characteristics  that 
must  be  present  in  effective  working  units: 

1.  The  economic  unit,  which  is  to  be  built  into  the  new 
society  as  stones  are  built  into  a  wall,  must  bear  a  very 
close  relation  to  the  present  working  forms  of  economic 
life. 

Ultimately,  the  economic  units  of  which  society  is  com- 
posed will  differ  completely  from  those  now  existing.  It  is 
quite  out  of  the  question,  however,  to  build  a  new  economic 
siructure  ami  new  economic  units  at  the  same  time.  Habit 
and  convention  are  too  strong.  Innovation  is  too  terrifying 
and  too  problematical.  The  life  of  local  economic  units  will 
IK-  carried  on  to-rnr.rrow  very  much  as  it  is  carried  on  to-day 
by  th"  masses  of  the  people.  The  most  workable  economic 
superstructure,  for  a  new  society,  will  be  built  upon  an 
answer  to  the  question:  ''How  is  work  done  now?"  This 
method  of  approach  takes  th"  basic  economic  activities  of  the 
masses  of  the  people  for  granted  and  s'-eks  to  build  them 
into  a  sounder  type  of  super-organization  than  that  now 
exist  incr. 

-.   The  e^onoiti  •  •  \in\i,  wJ>    '          its  size  end  function,  must 

!<    .-••"/ '"••.'  .•?/•''//  tion'O'it  ,••'•  <s  and  coherent  so  that  i'  n-H! 

/•>  fa  ,,   ,'•    it  a  '  •  i  •',  ;?  i'.\   'hi    'ace  <>1  sei'fre  stresses  a, /'I 

:-'lt'n  ,/s.      That   is,   i::  :v    •    \>>    in   a    state   of  relatively 

'.'•'  '•',  rlibrium. 

•>.  /  :  •••  /,  ;  •' .'  autonomous — sclf-rjorf  rn- 

':''-  '  ,..-.•-'.•••  '  '' iff . 

4.  7V  '  •  ,  ;    ..,.     ••       h  nt   of   Hi--  unit    must 

•   '       '    '    •  :  ' .  ,./•' .'  ic  ;  <  .•  that  win 

'•  •  '':l   l->'>. "»    ,".''',,    a ;td       •;-'-/'    1hc   means   of  pro- 
•  7  •   populafio   . 

';    •'    f],rtt    /'     y    it-ill    work    • 

'      "  ...        ',,     ft,      s,r,  .,        ;,,,;,,    , ,.  ,     ,,      j     -n 


ECONOMIC  FOUNDATIONS  71 

"Whether  plans  are  being  made  for  the  rebuilding  of 
existing  economic  institutions  or  for  the  establishment  of 
new  ones,  these  general  rules  hold  good.  They  have  as  their 
objective,  a  workable  social  system  that  will  turn  the  wealth 
of  nature's  storehouse  into  usable  forms,  and  that  will  procure 
the  distribution  of  the  good  things  of  life,  in  an  equitable 
manner,  among  the  groups  that  have  assisted  in  their  pro- 
duction. 

8.     Classes  of  Economic   Units 

Those  who  are  concerned  with  the  establishment  of  a 
working  basis  for  economic  society  must  bear  constantly  in 
mind  the  purpose  of  economic  organization — to  provide  liveli- 
hood on  the  most  effective  possible  terms.  The  economic 
system  is  not  called  on  to  perform  any  other  function. 

Economic  function  would  seem  to  be  most  effectively  aided 
by  some  organization  of  the  economic  units  that  would  pro- 
vide a  structurally  sound  skeleton  for  the  whole  economic 
mechanism.  The  needs  of  particular  localities,  the  require- 
ments of  larger  groups  within  one  industry,  the  economic 
relations  of  continental  areas,  and  finally  the  world  organiza- 
tion of  industries  must  be  provided  for.  In  order  to  meet 
this  situation,  it  would  seem  desirable  to  think  in  terms  of 
several  different  '_:rad"s  or  classes  of  economic  units.  As  ;i 


Tli is  unit  is  now  a  working  parr  of  the  p 
order,   and   whether   it   is  a    colliery   in    Wai'1 
the   P.  L.   ?J.   Railroad    in    Prance,   a   mill    in 
fanning  community  in   Raskal    '    ••     ..   it  wo 
process   of   tnrninu1   oni    [roods   and    services 


72  THE  NEXT  STEP 

2.  District  units  composed  of  a  number  of  neighboring 
local  units  in  the  same  industry  or  in  closely  related 
and  co-operative  industries. 

The  district  is  an  aggregation  of  conveniently  situated 
local  units,  and  is  organized  as  a  ready  means  of  increasing 
the  efficiency  of  the  groups  concerned.  It  might  cover  the 
tobacco  factories  of  Havana,  the  coal  mining  industry  of 
the  Pennsylvania  anthracite  fields  or  the  dock  working 
activities  of  Belfast. 

3.  The  divisional  units  which  would  l>e  designed  to  cover 
a  convenient  geographic  area,  and  to  include  all  of  the 
economic    activities    in    a,    particular    major    industry 
within  that  area. 

The  boundaries  of  the  districts  would  vary  from  one 
industry  to  another.  The  boundaries  of  the  divisions  would 
be  uniform  for  all  industries.  The  whole  world  would 
therefore  be  partitioned  into  a  number  of  divisions,  such,  for 
examph',  as:  North  America,  South  America.  South  Africa, 
the  Mediterranean  Basin,  Northern  Europe,  Northern  Asia, 
Eastern  Asia,  Southern  Asia  and  Australia.  In  setting  the 
boundary  lines  of  these  divisions,  economic  homogeneity, 
geographic  unity,  the  distribution  of  the  world  population 
and  the  character  of  existing  civilization  would  all  be  called 
into  question.  I'mler  such  a  grouping  would  fall  the  agri- 
cultural workers  of  Southern  Asia,  the  transport  workers  of 
Xorth  Europe,  the  manufacturing  workers  of  North  America. 

4.  World  industrial  units,  so  designed  as  to  include  within 
lr,f/r  scope  alt  of  the  producf-rs  of  the  world  classified 
in  accordance  with  thdr  occupations. 

To-day,  the  outstanding  method  of  classifying  the  people 
of  tin;  world  is  to  take  them  in  relation  to  their  political 
affiliations.  The  new  grouping  would  arrange  all  of  the  peo- 
ples in  accordance  with  their  economic  activities.  A 
simple  form  of  classification  would  include:  agriculture, 


ECONOMIC  FOUNDATIONS  73 

the  extractive  industries,  manufacturing,  transport,  trade, 
housekeeping1,  and  general  (miscellaneous)  trades.  The 
classification  might  be  made  far  more  elaborate,  but  for 
clarity  of  discussion,  a  simple  classification  is  of  great  assist- 
ance. Every  person  in  the  world  who  performed  a  useful 
service  would  belong  to  one  of  these  great  industrial  or 
occupational  groups,  and  the  aggregate  of  the  membership 
of  the  groups  would  equal  the  aggregate  of  all  the  producers 
of  the  world. 

Under  this  plan,  therefore,  each  individual  would  have 
a  series  of  economic  affiliations,  lie  might,  for  example,  be  a 
docker  on  the  French  Line  at  Le  Havre  (local  affiliation); 
a  dock  worker  in  the  Le  Havre  district  (district  affiliation)  ; 
a  transport  worker  of  North.  Europe  (divisional  affiliation)  ;  a. 
worker  in  the  transport  industries  of  the  world  (industrial 
affiliation) . 

Since  each  of  the  producers  in  the  world  would  have  this 
series  of  relations,  all  of  th'.1  producers  w.  .uld  be  grouped 
together  in  local,  in  district,  in  division;!'  and  in  world  indus- 
trial groups,  so  that  the  economic  life  of  the  \vorid  would 
present  the  picture  of  n  completed  economic  structure  very 
similar  to  the  political  structure  that  has  been  evolvimr  for 
many  centuries,  and  which  has  reached  its  highest  forms  of 
development,  in  such  new  countries  a^  Australia  and  the 
United  States,  where  each  person  is 
city  or  town,  in  ;;  c'Minly.  in  a  state  a 
or  federation  of  slates. 

\Vhile  political  life  lias  been  thus  organized  about  the 
administration  of.  certain  public  ai'iairs.  economic  l;ie  has 
remained  disorganized,  or  !K>  been  organized  largely  with 
a!)  eye  to  owners'  profits.  The  producers  society  will  be  organ- 
ized in  economic'  terms  very  much  as  the  present  society  is 
organized  in  political  terms.  Each  producer  will  be  a  partici- 
pant in  the  life  of  economic  units,  graduated  from  the  local 
economic  unit  to  the  world  industry. 


71  THE  XE::T  STEP 

9.     The  Ideal  and  the  Real 

This  is,  of  course,  an  idealized  picture,  subject  to  an 
infinitude  of  modifications,  just  as  an  architect's  plan  for 
"a  bungalow  in  the  woods"  or  a  city  planner's  scheme  for  a 
model  town  is  idealized  and  subject  to  modifications.  It  is 
not  a  working  drawing,  but  a  general  design  which  is  intended 
to  place  the  whole  subject  of  economic  reorganization  on  a 
plane  where  it  can  be  discussed  as  a  matter  of  practical  social 
science. 

The  plan  presented  here  is  simplified  as  far  as  possible 
In  order  that  attention  may  be  concentrated  on  the  essential 
issues  that  the  world  faces.  Too  much  time  and  energy  have 
already  gone  into  contentious  over  details,  when  there  was  no 
general  plan  in  view.  Let  no  man  deceive  himself  with  the 
delusion  that  the  solution  of  the  world's  economic  problem 
is  a  simple  matter,  but  at  the  same  time,  each  one  who  is 
striving  toward  a  better  world  may  rest  with  the  assurance 
that  there  are  certain  simple  and  fundamental  principles 
that  underlie  world  economic  orgaiii/ation. 

Society  is  structural,  and  as  a  structure  it  must  function; 
the  economic  world  is  built  up  of  working  units  that  are 
compelled,  by  the  nature  i  '  '  ipii  industry  to  work  co-opcra- 
Hvely,  but  the  \  ery  natur  •  «i'  the  political  structure  of  modern 
*•'"•'"  '  i'.s  this  co-operative  work  in  many  essential 

directions;   federation  seems:  to  be  -[he  logical  answer  to  the 
•   '      "  ctive  social  organization,   and  it  only  remains 
workable  series  of  economic  units  and  to  build 
structure — a  world  structure  in  terms  of 
it  her  than  of  polities. 

he    world    is    sadly    muddled.      Millions    pay    for    this 
ir  lives;   tens  of   millions  pay  with  hitter 


'  i  1  heir  dav.     Th< 


ECONOMIC  FOUNDATIONS  75 

must  see  the  whole  plan  as  •well  as  the  multiplicity  of  detail, 
and  must  work  with  the  whole  plan  vividly  before  their  eyes 
if  they  are  not  to  be  blinded  and  led  astray  by  the  multitude 
of  will-o'-the-wisps  that  flit  across  the  path. 


IV.    ECONOMIC    SELF-GOVERNMENT 

1.    Maximum  Advantage 

ECONOMIC  society  consists  of  unit  groups  or  organs  which 
are  established  for  tiie  performance  of  certain  functions.  Mines 
and  other  extractive  units  take  nature's  stores  from  their 
age-old  resting  place  and  prepare  them  for  the  railroad,  the 
factory  or  the  home;  the  transport  units  convey  goods  and 
people-;  the  merchandising  units  bring  together  many  varieties 
of  goods,  and  act  as  a  distributing  agency  for  those  who  will 
consume  the  prod  nets  of  mine  and  factory.  The  existence  of 
a  unit  of  economic  organization  is  therefore  a  proof  of  the 
preseii'-e  of  some  economic  function.  The  whole  structure  of 
economic  soeiely  has  developed  in  response  to  the  economic 
needs  and  in  accordance  with  the  economic  activities  of  the 
community  in  which  it  exists. 

When  a  part  of  the  economic  structure  is  built,  it  is 
expected  to  function.  Mines,  when  opened,  must  produce 
i-";1!;  railroads,  when  complete;,  must  provide  transportation. 
Side,  by  side  with  ihe  problems  involved  in  liie  kind  of  group- 
ings thai  make  up  economic,  society,  there  is  the  question  of 
ihe  handling  and  direction  of  these  groups.  No  economic 
institution  is  of  value  unless  it  will  perform  some  useful 
service  by  turning  out  an  economic  good,  or  by  affording  a 
benefit  thai  corresponds  to  some  human  need. 

Kadi  rational  person,  ami  every  self-directing  social  group 


faction  for  the  time  and  the  energy  invested  in  any  given 
enterprise.  This  law  of  maximum  advantage  —  which  applies 
with  double  force  to  social  enterprises,  underlies  all  intelli- 
gcntly  directed  effort. 

7G 


ECONOMIC  SELF-GOVERNMENT  77 

Unintelligent  effort  concerns  itself  with  the  principle  of 
minimum  outlay  —  seeking  to  ascertain  the  least  possible  ex- 
penditure of  energy  that  will  yield  a  subsistence.  This  is 
one  of  the  essential  distinctions  between  the  present  day 
society  and  most  of  those  that  have  proceeded  it.  Likewise  it 
is  the  difference  between  the  more  and  the  less  highly  civi- 
lized portions  of  the  earth  at  the  present  time.  The  individual 
or  the  group  —  operating  on  a  very  narrow  margin,  or  on  a 
deficit  that  involves  constant  misery  and  that  may  at  any 
time  spell  disaster,  tends  to  slip  by  with  the  least  possible 
misery  or  suffering,  or,  to  put  it  more  technically,  tends  to 
expend  the  least  possible  amount  of  energy  that  is  required 
for  survival.  The  moment  the  tables  are  turned,  and  the 
individual  or  the  group  operates  on  a  surplus  which  permits 
the  enjoyment  of  more  than  the  hare  necessaries,  the  law  of 
minimum  outlay  is  supplanted  by  the  law  of  maximum 
returns. 

The  truth  of  this  principle  is  strikingly  illustrated  in 
Canada,  Australia,  Argentina,  and  oilier  relatively  new 
societies  where  resources  are  abiuulant  and  surplus  is  large. 
The  same  men  and  women  who,  under  Ktiropean  conditions 
of  narrow  marginal  living,  were  satisfied  to  survive  with  the 
least  possible  expenditure  of  effort,  are  transformed  into 
creatures  operating  on  another  economic  plane.  In  these,  new 
and  fertile  countries,  where  the  individual,  and  indeed,  the 
entire  group  is  able  to  live  above  the  lino  of  bare  subsistence, 

idual 


evotes  lih?.ise]f  untirinl     to  the  economic  struggle, 


cause  they  are  poor,  but  becan  ; 


78  THE  NEXT  STEP 

up  a  surplus  as  soon  as  it  realizes  the  possibility  of  increasing 
its  returns  through  an  increase  in  the  energy  and  intelligence 
devoted  to  group  purposes. 

The   personal   comfort  and  the  industrial  prosperity  of 

temperate  zone  civilizations  depend,  at  the  present  moment, 
in  great  measure  upon  the  supply  of  coal  which  is  available. 
Certain  parts  of  the  earth,  .such  as  Wales,  the  Saar  Basin 
and  Newfoundland  contain  coal  deposits  upon  which  the 
entire  industrial  society  is  dependent  for  its  survival.  It  is, 
then,  a  mnlter  of  the  gravest  importance  to  secure  a  maximum 
coal  output,  at  least  to  the  point  of  satisfying  the  minimum 
demands  of  the  community.  AVliatever  men  and  machinery 
are  required  to  produce  the  ration  of  coal  upon  which  indus- 
trial efficiency  depends  must  be  directed  toward  that  goal. 
At  the  same  time,  waste,  inefficiency  and  dis-employment, 
whether  of  men  or  of  machines  must  be  reduced  to  a 
minimum. 

What,  volume  of  production  constitutes  a  maximum  of 
return  under  a  given  set  of  circumstances,  experiment  alone 
will  decide,  but  the  individual  and  the  social  effort  to  secure 
this  return  must  be  unremitting. 

Su<-h  maximum  returns  will  be  obtained  by  society  when 
each  productive  unit  is  operating  at  maximum  efficiency.  The 
efficieney  of  the  human  body  depends  upon  the  efficient  oper- 
ation of  the  digestive  syslem.  the  respiratory  system,  the 
oircubilory  syslem,  and  so  on.  The  stomach,  the  lungs,  the 
heart  must,  all  function  smoothly  to  maintain  bodily  health. 
The  body  cannot  funciimi  as  a  body,  ft  functions  "through 
the  ;iL"_rre;_rate  activilies  of  its  various  organs.  The  same 
•filing  is  true  of  a  society,  ft  is  impossible  for  the-  economic 
system  to  secure  its  maximum  returns  as  a  system.  It  will  work 
only  through  tin-  co-operative  Functioning  of  its  various  con- 
ien1  elements.  If  the  efficiency  (health)  of  the  economic 
system  is  to  be  preserved,  it  will  be  accomplished  through 
""(•live  working  of  the  mines  and  other  extractive  units; 


ECONOMIC  SELF-GOVERNMENT  79 

the  mills,  and  the  other  fabricating  units;  the  railroads  and 
other  transport  units.  Each  one  of  these  constituent  elements 
of  the  whole  economic  society  must  he  self-efficient,  in  order 
that  there  may  be  a  high  standard  of  efficiency  in  the  entire 
economic  system. 

The  units  of  which  the  economic  system  is  composed  must 
therefore  be  self-motivating  and  self-acting.  They  must  be 
"alive."  If  one  part  of  the  economic  body  is  dead,  the  whole 
will  eventually  disintegrate  and  decay. 

2.    The  Essentials  for  Maximum  Returns 

The  efficiency  of  the  economic  unit — the  mine,  the  factory, 
the  railroad  division — depends  upon  the  attitude  of  the  indivi- 
dual human  beings  of  which  the  unit  is  composed.  Just  as 
the  entire  economic  system  is  made  up  of  an  aggregate  of 
functioning  units,  so  each  unit  is  made  up  of  functioning 
individuals.  What  would  a  coal  mine  be  without  its  pick 
miners,  roadmen,  drivers,  door-men,  dumpers?  The  efficiency 
of  the  economic  unit  cannot  be  maintained  unless  the 
individuals  who  compose  it  are  self-acting,  intelligent 
beings,  who  know  what  they  want  and  why  they  want 
it;  who  know  the  ends  they  desire  to  attain  and  how 
to  reach  them.  Without  this  beginning  there  can  be 
no  lasting  efficiency  in  a  society  thai  is  dependent  for 
its  success  upon  the  self-generated  aetivity  of  autonomous 
groups. 

In  order  that  society  may  enjoy  a  maximum  of  return  for 
its  outlay  of  labor  and  machinery,  therefore: 

1.  The  human  ral'cex  present  hi  each  econom  <•  unit  mu.<t 
be  maintained  //'  «  I>i</i>  In-fl  thruiinli  <;n  appeal  1<>  ! In- 
fine  st  ejuaJil't'x  of  Ihe  individual  human  l)<>i«j. 

That  appeal  must  be  stroiiQ-  enoncrh  and  constant  pnongh. 
when  coupled  with  th'"1  economic  appeal,  to  provide  a  reason 
or  incentive  for  continued  activity. 


M)  THE  NEXT  STEP 

2.  The  integrity  and  permanence  of  the  unit  must  ~be 

preserved. 

The  economic  unit  is  one  of  the  tools  with  which  society 
does  its  work,  and  is  the  means  relied  upon  for  the  production 
of  livelihood.  Like  the  axe  of  the  woodsman  or  the  lathe  of 
the  mechanic,  the  social  tools  and  machinery  must  be  kept 
in  effective  working  order  if  .society  is  to  receive  a  return  for 
its  outlay  of  labor  and  materials.  Three  items  enter  into 
the  maintenance  of  this  efficiency:  (a)  current  repairs,  (b) 
periodic  rebuilding,  and  (c)  ultimate  replacement.  This  is 
as  true  of  any  part  of  the  social  structure  as  it  is  of  mechani- 
cal devices.  The  more  complicated  the  structure  the  more 
necessary  arc  rebuilding  and  replacement. 

3.  The  itt'fjilii.ctlvitij  of  thr  un>'t  must  l>e  I'cpt  up  to  a  high 
level  of  efficiency. 

This  is  the  purpose  for  which  the  unit  exists.  Efficiency 
is  the  product  of  the  individual  activity  of  the  group  members, 
and  of  the  working  effectiveness  of  the  mechanism  with  which 


ciency  in  producl  ion. 

4.  Self-motivation  a/id  co-operation  ar<  the  tico  fund-a- 
'nicntalbj  'in  port  ant  requirements  in  the  working  of  all 
economic  units. 

The  former  IN  the  best  guarantee  of  the  continuous  i'unc- 
tioning  or  the  unit.  The  latter  links  together  the  different 
units,  making  them  working  parts  of  the  \v3  ••  economic 
sy.- 1  cm. 

1   are  four    indi  •     foments — the    7::a;:.' c- 

•  of   human   values,  the   preservation  of  group  \'\\- 
tiisfi    perm,  nonce,     pi'odu.ftlvc    t'lTicieney    and    self-generated 
a»M  ivi-y  —  i'i n*  1  . •_•   •.:..!    •;,  •  r-ssful  con' 

i  f  sofiety  is  to  ,si 
. '  -  -,  1 1    is    to 


ECONOMIC  SELF-GOVERNMENT  81 

society  is  built  must  meet  these  requirements  which  constitute 
four  of  the  essential  pre-recjuisites  to  the  success  of  any  eco- 
nomic experiment. 

3.    Centralized  Authority 

Granted  the  desirability  of  efficiency  in  economic  organi- 
zation, the  question  at  once  arises  as  to  how  this  efficiency 
is  to  be  guaranteed.  Up  to  this  point  the  means  adopted  to 
secure  such  an  end  have  consisted  in  concentrating  economic 
authority  in  the  hands  of  a  small  owning  and  managing  class, 
and  in  leaving  with  the  members  of  this  class  the  determina- 
tion of  policy  and  of  methods  of  procedure. 

The  concentration  of  administrative  authority  at  one  point 
has  proved  impracticable,  first  because  of  the  great  amount 
of  red  tape  involved  in  the  handling  of  the  endless  detail,  and 
second  because  of  the  resulting  destruction  of  initiative  and 
enterprise.  Such  a  centralization  of  social  function  would 
be  just  as  cumbersome  as  a  like  centralization  of  all  bodily 
functions  in  the  higher  brain  centres.  If  men  were  compelled 
to  reason  about  and  to  direct  each  step,  each  movement  of  eyes 
or  hands,  each  breath,  each  heart-beat,  the  attention  would 
never  pa.ss  beyond  the  boundaries  of  such  pressing  and  never- 
ending  routine.  Many  bodily  organs,  like  the  stomach,  func- 
tion involuntarily.  "Walking  becomes  habitual.  It  is  only 
when  the  stomach  and  the  legs  fail  to  \vork  properly  that  they 
become  the  objects  of  attention.  The  same  thinir  should  be 
true  of  a  well-directed  economic  system.  Kach  local  unit 
should  function  locally  and  autonomously,  and  the  problems 
of  local  function  should  never  come  to  the  attention  of  a  more 
central  authority  until  there  is  some  failure  to  work  on  the 
part  of  the  local  unit. 

Those  who  despair  of  the  future  of  society,  and  who  feel 
that  effective  co-operation  between  social  croups  is  impossible, 
should  remember  that  the  organs  of  the  human  body  have 
been  gaining  experience  in  co-operative  and  harmonious 


82  THE  NEXT  STEP 

function  for  hundreds  of  thousands  or  for  millions  of  years, 
while  the  organization  of  society  is  an  art  that  is  still  in  its 
extreme  infancy.  The  astonishing  thing  about  the  various 
social  groups  is  not  that  they  work  so  badly  together,  but 
that  they  work  so  well. 

As  the  centralization  of  authority  increases,  the  amount  of 
red-tape  piles  up  until  more  social  energy  is  consumed  in 
overcoming  social  inertia  and  the  friction  that  is  the  result 
of  social  function,  than  is  produced  by  the  function  in  ques- 
tion. When  this  point  is  reached,  the  social  machinery  oper- 
ates at  a  constant  loss,  and  it  is  only  a  question  of  time  when 
it  will  cease  to  operate  altogether,  and  the  social  machinery 
will  begin  to  disintegrate  into  its  constituent  elements.  The 
greater  the  degree,  therefore,  of  localization,  provided  the 
mechanism  can  be  held  together  and  kept  in  working  order, 
the  less  the  loss  in  social  energy. 

4.     An  Ideal  Economic   Unit 

The  social  group  thus  faces  two  problems :  One  is  the 
development  of  sufficient  energy  to  keep  the  social  machinery 
going.  This  problem  is  tied  up  with  the  stimulation  of  human 
wants,  as  it  is  only  from  the  aroused  energies  of  men  and 
women  that  the  social  energy  is  derived.  The  other  is  the 
reduction  of  social  friction  and  other  forms  of  social  waste 
to  a  minimum,  in  order  that  the  largest  possible  amount  of 
social  cnd'iry  may  be  devoted  to  the  work  of  driving  society. 

The  present  social  order  relies,  in  part,  for  its  driving 
power  on  man's  desire  for  personal  economic  advantage. 
Where  the  rewards  have  been  considerable,  large  amounts  of 
end-fry  and  ingenuity  have  been  developed  as  the  result  of 
this  stimulus.  The  worker,  the  manager,  the  whole  producing 
unit  strove  io  excel,  both  because  failure  carried  with  it  the 
penalty  of  destruction  (bankruptcy  or  unemployment)  and 
because  success  carried  with  it  the  probability  of  large  eco- 
nomic n-wards  /'profits).  The  result  was  an  outpouring  of 

social    on  erf  v    in    the   vat-inns    inrlpnfnrlpnt    lno:il    rrrrmnt: 


ECONOMIC  SELF-GOVERNMENT  83 

The  real  difficulty  inherent  in  the  earlier  stages  of  the 
present  order  was  not  its  failure  to  secure  abundant  human 
exertion,  but  its  failure  to  provide  any  means  of  co-operation 
between  individuals  and  between  groups.  The  same  set  of 
social  principles  which  decreed  local  rewards  and  local  punish- 
ments for  initiative  and  enterprise,  or  for  the  lack  of  them, 
was  built  upon  the  theory  that  "competition  is  the  life  of 
trade."  Thus,  while  the  present  economic  system,  in  its  ear- 
lier stages  tended  to  stimulate  initiative,  its  form  made 
co-operation  difficult  or  impossible. 

The  ideal  economic  unit  would  he  one  capable  of  generat- 
ing its  own  driving  power,  and  given  a  legitimate  exchange 
of  commodities  and  services  with  other  units,  one  that  could 
maintain  its  own  energy  and  efficiency.  A  society  composed 
of  such  units  would  have  great  vitality  because  its  energy 
would  be  generated  in  a  large  number  of  more  or  less  inde- 
pendent localities.  A  study  of  the  agricultural  village  of 
Central  Europe  or  of  the  Mexican  Indians  shows  how  work- 
able and  how  stable  such  a  form  of  society  really  is. 

The  only  practicable  method  of  maintaining  efficiency  and 
of  reducing  the  friction  incident  to  social  function  is  to  erect 
a  form  of  local  self-government  that  will  make  possible  both 
the  stimulation  of  initiative  and  effective  co-operation  between 
groups. 

f).    Rewarding  Encrnjt 

The  issue  of  economic  self-government  resolves  itself  imo 
two  questions,  which  the  average  human  being  will  sooner 
or  later  ask : 

1.  What  do  T  get  out  of  it  ? 

2.  Who  is  to  be  the  boss? 

The  intelligent  man  or  woman  cannot  be  expected  to 
exert  himself  freely  for  the  build  inn  of  <i  palace  at  Versailles, 
on  whose  grounds  he  can  never  set  foot,  or  for  {he  maintenance 
of  a  Palm  Beach  that  he  sees  only  on  the  screen.  The  economic 


84  THE  NEXT  STEP 

necessities  are  too  immediate  and  the  economic  urge  is  too 
strong. 

Before  the  individual  will  expend  his  maximum  energy 
upon  the  economic  process,  he  must  see  tangible  results  such 
as  bread,  shoes,  schools,  and  holidays.  One  of  the  strongest 
arguments  that  the  present  economic  system  advances  in  favor 
of  its  continuance  is  the  showing  of  large  tangible  returns  in 
the  form  of  economic  goods.  To  be  sure  these  results  have  not 
been  secured  by  everyone,  but  there  is  neighbor  Pitt  who 
started  as  a  stable  boy,  and  who  now  owns  the  largest  garage 
in  the  city;  there  is  neighbor  Wallace  who  began  life  as  a 
grocery  clerk  and  to-day  is  master  of  many  acres  of  coal  and 
timber.  Besides,  yonder  store  is  filled  with  the  good  things  of 
life,  ready  for  anyone  who  has  the  money  to  buy  them.  Many 
persons,  under  the  present  system,  make  enough  to  buy  all  of 
them  and  others  beside.  So  the  argument  runs,  and  those  who 
advance  it  can  give  a  wealth  of  instances  to  prove  the  point. 

The  huge  rewards  of  the  present  system  even  though  they 
have  gone  to  the  very  few,  have  been  turned  over  to  those 
who  could  survive  in  the  struggle.  Everyone  knows  that  the 
winners  in  a  lottery  arc  few  and  the  losers  many,  yet  each 
buys  a  ticket  because  he  hopes  and  expects  to  be  one  of  the 
winners. 

Society,  as  reconstructed,  must  lie  less  of  a  gambling  ven- 
ture ;md  more  of  an  established  certainty,  with  the  material 
I'c-.vards  goiiitr  to  those  who  are  responsible  for  producing 
them.  And  each  person  who  thus  shares  in  the  economic  re- 
wards  of  society  must  see  the  connection  between  the  energy 
expended  and  the  share  received.  Only  while  such  a  con- 
nection  apparently  exists  will  economic  effort  be  expended 
by  the  normal  individual. 

C.     T!>r  OurnfrsJnp  of  the  Economic  Machinery 

The  individual  cannot  be  expected  to  exert  himself  where 
there  is  no  apparent  connection  between  the  effort  expended 


ECONOMIC  SELF-GOVERNMENT  85 

and  the  return  for  his  effort.  Neither  can  he  be  expected 
to  exert  himself  in  the  interest  of  economic  machinery  that 
belongs  to  someone  else.  His  interest  can  be  maintained  only 
by  the  hope  of  a  return  for  the  effort  that  he  expends,  and 
by  a  sense  of  control  over  the  job  on  which  he  works.  Among1 
the  various  experiments  that  society  has  tried,  in  an  effort 
to  attain  these  ends,  none  has  been  more  sucessful  than  self- 
government. 

The  application  of  the  principle  of  self-government  to  the 
economic  world  involves  the  control  of  economic  machinery 
and  economic  policy  in  each  unit  by  those  who  com- 
pose the  unit.  The  members  of  each  economic  group 
must  be  supreme  in  their  own.  field,  except  ';i  so  far  as 
their  decisions  affect  the  welfare  of  other  units.  In  such  cases 
the  decision  must  .rest  with  that  larger  economic  group  to 
which  the  involved  economic  units  belong.  Thus  the  aim  of 
economic  self-government  is  to  keep  the  responsibility  cen- 
tered upon  those  who  would  normally  be  the  most  concerned 
in  getting  results. 

All  matters  of  policy  will  therefore  be  decided  by  those 
individuals  or  groups  that  are  directly  involved.  Where 
possible  such  decisions  should  be  reached  in  open  meetings 
corresponding  to  the  1rib,-d  council  or  the  town  uu'elinjr.  ^udi 
meetings  may  always  he  held  in  local,  economic  units,  such 
as  collieries,  denartments  of  factories  and  the  like.  Where 
it  proves  impossible  to  get  the  members  of  an  economic  group 
all  into  one  meeting  place,  their  affairs  in 
transacted  by  representatives,  chosen  as  d: 


7. 

The  decisions  having  been  made  with  regard  to  matters 
of  policy,  the  next  and  equally  important  question  arises: 
"Who  shall  be  entrusted  with  the  duiy  of  seeing  that  policies 
once  decided  upon  are  carried  out?  Who  shall  be  entrusted 
with  leadership  in  economic  affair.-'?'' 


86  THE  XEXT  STEP 

Those  who  are  entrusted  with  the  carrying  out  of  economic 
policy  in  a  producers'  society  may  be  divided,  roughly,  into 
two  classes :  the  executive  and  the  expert.  The  executive  is 
the  director  of  general  policy.  The  expert  is  the  specialist, 
selected  to  do  a  particular  piece  of  work.  For  example,  the 
representatives  of  District  2,  United  Mine  "Workers  of 
America  decide  that,  as  a  matter  of  general  policy,  they  will 
advocate  the  nationalization  of  the  coal  mines,  and  they  in- 
struct their  president  and  their  executive  board  accordingly. 
The  executives  of  District  2  are  therefore  charged  with  the 
duty  of  organizing  a  propaganda,  which,  to  be  effective,  must 
consist  of  a  well-ordered  summary  of  facts  about  the  coal 
mining  industry,  put  in  a  form  that  can  be  easily  understood 
by  the  average  man,  and  distributed  in  such  a  manner  that 
it  will  reach  the  people  responsible  for  coal  mine  nationaliza- 
tion. Here,  then,  are  three  distinct  tasks:  (1)  an  investiga- 
tion of  the  facts;  (2)  a  plan  for  nationalization;  and  (3)  an 
advertising  campaign.  The  first  two  of  these  tasks,  to  be 
well  done,  must  be  placed  in  the  hands  of  engineers,  statis- 
ticians and  mine  experts.  The  third  will  fall  to  the  lot  of 
an  advertising  or  publicity  mail.  The  president  of  District  2 
is  an  executive,  charged  with  the  duty  of  seeing  that  a  pro- 
gram of  mine  nationalization  is  carried  forward.  The  engi- 
neers, statisticians  and  advertising  men  that  lie  secures  to  do 
the  work  in  their  respective  fields  are  experts.  The.se>  dis- 
tinctions have  been  well  established  in  the  world  of  govern- 
ni'-nt  and  of  business,  and  they  are  rapidly  finding  their  way 
into  the  world  of  labor. 

There  can  he  no  great  difference  of  opinion  about  the 
export.  Tie  is  a  technically  trained  man.  and  as  a  chemist,  an 
rician.  or  as  an  auditor  of  accounts  lie  lias  a  special  field 
in  which  he  is  supposed  to  he  a  master  craftsman.  The  selec- 
tion of  sivh  an  expert,  therefore,  is  a  question  of  finding  men 
with  fhr  knowledge  and  experience  necessary  for  the  doing 
•  Ttain  piece  of  work. 


ECONOMIC  SELF-GOVERNMENT  87 

8.     The  Selection  of  Leaders 

The  situation  is  far  more  complicated  when  it  comes  to 
the  selection  of  the  executive.  He  is  the  keystone  of  the 
social  arch — the  binding  force  that  holds  the  various  parts 
of  the  group  apart  and  together.  Upon  his  decisions  may 
depend  the  success  or  the  failure  of  an  entire  enterprise,  be- 
cause, tie  him  with  red  tape  as  you  will,  he  still  has  a  margin 
of  free  choice  in  which  he  registers  his  success  or  failure  as 
an  executive. 

The  executive  is  put  in  office  to  do  the  will  of  a  constitu- 
ency and  to  carry  out  a  certain  policy.  But  what  is  the  will 
of  the  constituency,  and  which  one  of  a  half  dozen  lines  of 
action  will  most  completely  and  effectively  carry  out  the  policy 
in  question?  The  executive  must  find  an  answer  to  those 
questions,  and  he  must  find  it  hour  after  hour  and  day  after 
day. 

Society  has  striven  for  ages  to  devise  a  successful  method 
of  picking  executives,  and  of  keeping  a  watchful  eye  on  them 
after  they  assume  the  reins  of  government.  There  are  three 
general  ways  in  which  the  selection  may  he  made: 

1.  Through  heredity — the  leadership  descending  from  one 
generation  to  the  next  in  the  line  of  Mood  relationship. 

This  is  the  method  practiced  in  all  countries  that  have 
kings,  aristocrats,  plutocrats  or  others  who  automatically  in- 
herit power  from  their  ancestors. 

2.  Through   self-selection — the   leadership   being   assumed 
by  those  who  are  the  ouickest  to  seize  it. 

Primitive,  disorganized  or  unorganized  societies  or  asso- 
ciations pick  their  leaders  in  tin's  way.  The  strongest,  the 
most  courageous,  the  most  cunning,  press  tn  (he  frniil  in  an 
emergency,  and  their  leadership  is  accepted  ns  a  matter  <>i 
course  by  those  who  are  less  strong  or  cour;i'_reons  °r  c 
The  leaders  of  a  miscellaneous  mob  are 


88  THE  NEXT  STEP 

most  part,  self-selected.  Seeing  opportunities  for  economic 
advantage,  they  have  grasped  them  before  their  fellows  real- 
ized what  was  happening'.  The  great  accumulations  of  eco- 
nomic power  that  were  made  in  this  way  during  the  past 
genera! ion  are  now  being  passed  from  father  to  son,  and  the 
leadership  in  American  economic  life  is  therefore  tending  to 
fall  into  an  hereditary  caste  or  class.  There  is  still,  however, 
a  considerable  margin  of  self-selection  of  American  economic 
leadership. 

3.  Through  social  selection — the  right  and  duty  of  leader- 
ship behur  assigned  by  the  group,  after  some  form  of 
deliberation  to  a  designated  individual. 

This  is  the  method  common  to  all  highly  organized  and 
self-conscious  societies  that  are  not  dominated  by  a  system 
of  hereditary  caste  rule.  Public  officials  in  most  of  the  coun- 
tries of  th"  world,  officials  of  trade  unions  and  other  volun- 
tary  associations  are  usually  selected  in  this  manner. 

The  selection  of  executive  leadership  in  any  organized 
society  must  be  through  heredity  or  through  group  choice. 
Self-selection  is  necessarily  confined  to  new  or  temporary  or 
loosely  organized  groups. 

(J.     The  Details  of  Organization 

These  general  principles  of  economic  self-government  may 
be  applied  to  local,  di.-lrict.  divisional  and  to  world  economic 
groupings.  To  tie  sure  the  application,  in  each  instance, 
will  IK;  varied  in  accordance  with  lie'  peculiar  needs  in  fjues- 
i!"ii.  but  a  general  scheme  of  procedure  may  be  suggested 

'  as  f oihj  v.  - : 

1.  SrocKSTiuxs  FOR  THE  OKU. \XIZATIOX  or  A  LOCAL  ECO- 
NOMIC CXIT  JX  A  GIVEN  INDUSTRY — A  MINE,  FACTORY, 
STOP,;-: — 

a.  The  entire  working  force  would  meet  at  regular 
intervals,  in  a  -hop  meeting,  or  colliery  meeting,  or 
store  meeting,  to  transact  general  business. 


ECONOMIC  SELF-GOVERNMENT  89 

b.  At  such  a  meeting  a  shop  committee  selected  by  those 
present,   would   be   charged   with    the   responsibility 
of  directing,  affairs  in  the  shop  that  had  selected  it. 
The  shop  committee  would  consist  of  a  small  group, 
varying  in  size  with  the  size  of  shop,  under  the  chair- 
manship of  a  person  selected  by  the  workers  at  the 
same  time  they  elected  the  committee. 

c.  This  chairman  of  the  shop  committee  would  be  called 
the   shop   chairman.     His   duties   would   correspond 
roughly  with  those  of  the  present-day   foreman,  or 
with   those   01   the  shop-steward  or   shop   chairman 
in  some  of  the  more  advanced  of  the  Uritish  indus- 
tries,    in  reality  this  .shop  chairman   would  lie  the 
shop  executive,  holding  ui'iice  while  he  could  retain 
the  good  will  of  his  shop-mates,  and  while  he  could 
give  a  satisfactory  account  of  his  shop  in  the  way  of 
production  and  discipline. 

d.  Where  there  were  a,  number  of  departments  in  a. 
large    factory,    store   or   other   establishment,   there 
would  be  a  plant  committee  made  up  of  the  chairmen 
of  ail  shop  committees  in  the  plant. 

e.  AVherc  plant  committees  were  organized,  it  would  be 
their  duty  to  designate  one  ol'  their  members  as  i  hair- 
man.     This  plant  committee1  chairman  would  there- 
fore be  what,  under  present  conditions,  is  the  general 
manager  of  the  plant,  with  his  Fellow  eommitteemen 
as  his  executive  committee  or  hoard  of  manager?. 

f.  Each  economic   unit,  whether  shop  or  ph;nt.   would 
have    its    engineers    or    experts,    picked,    like    other 
workers,   by  the  shop  committee  or  the  plant  com- 
mittee,   and    responsible    to    that    committee   for   the 
particular  tasks  assigned  to  them. 

All  participation  in  the  activities  of  this  basic  economic 
unit — hiring  and  liring  as  it  is  called — would  be  determined 
by  the  shop  committees  and  by  the  plant  committee,  each  with 


90  THE  NEXT  STEP 

final  local  jurisdiction,  subject,  of  course,  to  a  referendum  of 
the  workers  in  the  department  or  the  plant  concerned.  By 
this  means,  the  members  of  each  basic  economic  group  would 
be  made  the  sole  judges  as  to  those  with  whom  they  should 
work.  Each  group  would  therefore  have  an  opportunity  to  set 
its  own  group  standards  and  to  build  up  its  own  group  spirit. 

The  individual  worker,  in  order  to  secure  a  job,  or  work 
place,  must  therefore  subject  himself  to  the  scrutiny  of  his 
prospective  shop-mates,  perhaps  even  to  work  for  a  time  on 
probation,  and  this  to  prove  his  fitness  to  join  the  group  and 
thus  to  participate  in  its  activities. 

Such  a  plan  would  provide  a  self-governing  and  self-direct- 
ing economic  unit,  capable  of  adaptation  to  the  various  phases 
of  economic  life,  and  at  the  same  time  capable  of  generating 
its  own  social  steam,  and  thus  driving  itself  forward  on  the 
path  of  its  own  activities. 

Farming,  hand-craft  industries,  and  other  occupations  in 
which  the  worker  owns  his  own  tools,  and  is  worker,  manager 
and  business-man  combined,  would  be  forced  to  organize  a 
local  unit  more  nearly  approximating  the  mediaeval  guild  or 
some  of  the  modern  organizations  for  producers'  co-opera- 
tion. The  general  principles  of  organization  would  be  the  same 
in  the  one  case  as  in  the  other,  power  and  control  being  held 
locally  by  self-directing,  autonomous  groups. 

This  plan  for  the  organization  of  a  local  self-governing  eco- 
nomic unit  represents  an  attempt  to  apply  the  best  principles 
of  economic  and  political  science  to  the  working  out  of  an  in- 
telligently directed  society. 

-.    SUGGESTIONS    FOR    THE    ORGAXTZATIOX    OF    AX    ECONOMIC 
DISTRICT    IX    A    CilVKX    IXDT'STUY. 

a.  The  district  would  consist  of  a  number  of  economic 
unils  in  the  same  or  in  an  immediately  related  field 
of  industry.  For  example,  it  might  be  formed  of  steel 
mills  alone,  or  of  machine  shops  and  steel  mills,  or  of 
machine  shops,  steel  mills,  and  foundries.  The  deci- 


ECONOMIC  SELF-GOVERNMENT  91 

sion  on  the  matter  of  membership  in  the  district 
would  rest,  first  with  the  local  economic  units  that 
united  to  form  the  district,  and  second,  with  the  in- 
dustries immediately  concerned.  The  purpose  of  the 
organization  would  be  to  link  together  those  economic 
units  that  were  most  dependent  upon  one  another,  and 
that  therefore  had  the  most  interests  in  common. 

b.  When    formed,    the   organization    would   apply   for 
recognition  to  the  divisional  organization  of  its  par- 
ticular industry.   If  the  district  comprised  manufac- 
turing industries,   it  would  apply  to  the  divisional 
organization  of  the  manufacturing  industries;  if  the 
district  comprised  coal  mines,  it  would  apply  to  the 
divisional  organization  of  the  extractive  industries. 
It  would  be  to  the  interest  of  the  divisional  organi- 
zation to  recognize  only  such  district  organizations  as 
did  not  involve  the  divisional  organization  in  juris- 
dictional  disputes. 

c.  After     securing     recognition     from    the     divisional 
organization,  the  dislrict  organization  would  lie  the 
judge  of  its  own  membership,  and  would  he  in  a  posi- 
tion  to   add  such   local   economic   units   as   were   to 
its  advantage  in  pursuit  of  its  general  policy. 

d.  The  control  over  the  affairs  of  the  district  would  be 
iii  the  hands  of  a  district  committee,  elected  directly 
by  the  workers  of  the  district,  each  group  of  workers 
voting  by  ballot,  in  its  own  shop. 

A.  When  the  elections  for  membership  of  the  district 
committee  were  held,  the  members  of  tin-  plant 
committees,  or  of  the  shop  committees  where  there 
were  no  plant  committees,  would  he  the  candi- 
dates. By  this  means,  only  those  of  recognized 
standing  in  a  local  group  could  become  candidates 
for  the  higher  offices.  At  ihe  same  time,  the 
local  group,  when  it  ousted  to  local  office  would 
be  nominating  for  higher  office. 


92  THE  NEXT  STEP 

B.  When  a  plant  committeeman  was  elected  to  the 
district  committee,  his  position  in  the  plant  com- 
mittee would  l)e  tilled  by  special  election. 

e.  The  district  committee  would  be  a  large  body,  con- 
sist hi"-  of  at  least  one  representative  1'rom  each  of  the 
plants  or  shops  in  the  district. 

f.  The  routine  work  of  the  district  committee  would  be 
handled  by  the  district  executive  committee,  picked 
by  the  district  committee  from  its  own  membership, 
and  responsible  to  it  as  a  board  of  managers. 

g.  Each  district  would  have  its  staff  of  engineers,  ex- 
perts or  inspectors,  whose  duty  it  would  be  to  check 
up  on  the  technical  side  of  the  activities  in  the  dis- 
trict, very  much  as  a  county  agri<  ullnral  agent  or  a 
district   sales   manager   checks   up    on   the   work  of 
those   who  come  within  his  jurisdiction.     These  ex- 
perts would  be  selected  by  the  district  executive  com- 
mittee, subject  to  the  approval  of  the  district  com- 
mittee. 

h.  \Yhere  possible,  important  issues  confronting  the  dis- 
trict would  be  brought  to  the  attention  of  the 
workers  in  the  district  through  one  or  a  series  of 
mass  meetings.  Where  this  proved  to  be  impossible, 
newspapers,  leaflets,  and  other  forms  of  printed  in- 
formation must  suffice. 

i.  The  district  would  therefore  be  a  self-governing 
group  of  economic  units,  engaged  in  activities  that 
fell  within  one  of  the  main  divisions  of  industry.  It 
would  be  the  judge  of  its  own  economic  affairs  and 
would  be  autonomous  in  nil  matters  affecting'  only  the 
district. 

•  I.  St'GGKSTlOXS  F»;j  TIIF.  OltGAXT/ATION  OF  A  GEOGRAPHIC 
DIVISION'  WlTillX  A  G1VF.X  1XDUSTKIAL  OH  OCCUPATIONAL! 
GUI  IUP, 

a.  The    division    would    consist    of    a    convenient    ceo- 


ECONOMIC  SELF-GOVERNMENT  93 

graphic  area,  in  so  far  as  possible  contiguous  and 
closely  bound  together  by  transport  facilities,  related 
economic  interests,  etc.  North  America,  South  Amer- 
ica, South  Africa,  and  Mediterranean  Basin,  North- 
ern Europe,  Northern  Asia,  Eastern  Asia,  Southern 
Asia,  and  Australia  might  be  agreed  upon  as  such 
divisions. 

b.  The  organization  of  the  division  is,  in  the  main,  a 
replica  of  the  organization  of  the  district,  with  two 
exceptions : 

A.  The   scope    of   the    organization    is   limited   geo- 
graphically to  the  division  in  question,  and  covers 
all  of  this  division,  whereas  the  district  organiza- 
tion  includes   a  group   of  local   economic   units, 
which  arc  not  necessarily  contiguous,  and  are  in 
no  particular  geographic  relation  to  one  another. 
While  the  district  organization  is  strictly  indus- 
trial, the  divisional  organization  is  industrial  and 
geographic. 

B.  The  organization  is  definitely  limited  to  tin1  major 
occupational  groups,  each  of  the  groups  covering 
the  whole  of  the  division.     Tlence  then-  would  be, 
in  each  division,  a  division  organization  of  trans- 
port workers,  a  division  organization  of  agricul- 
tural   workers,    a    division    organization   of  those 
engaged  in  manufacturing  and  so  on,  making  a 
divisional    organization    for    each    of    the    major 
industrial  groups.     A  (list  rict  miirht  comprise  only 
one  branch  of  an  industry  such  as  textile  manu- 
facturing or  electric  transport.     All  of  these  dis- 
tricts would  be  included,  however,  in  th"  partic- 
ular   divisional    organization    with    which    they 
would  logically  affiliate.     Thus  there  mi<rht  be  a 
district  organization   for   the  textile  workers   of 
Lvons  and  vicinitv,  and  another  district  organiza- 


94  THE  NEXT  STEP 

tion  for  the  metal  workers  of  St.  Etienne  and 
vicinity.    Both  districts  would  be  included  in  the 
divisional  organization  of  the  manufacturing  in- 
dustries of  the  Mediterranean  Basin, 
c.  The  control  of  each  industry  within  a  division  would 
1)0  vested  in  a  divisional  congress,  elected  directly 
by  all  of  the  workers  in  the  division  who  were  en- 
gaged in  that  industry. 

A.  The  members  of  this  congress  would  be  elected 
by  districts,  witli  a  minimum  of  at  least  one  mem- 
ber from  each  district,  and  an  additional  member 
from  each  district  for  eacli  additional  quota  of 
workers  over  a  specified  minimum.     The  details 
would  necessarily  vary  with  the  division,  but  if 
there  were  100  districts  in  a  division,  with  a  mil- 
lion workers  in  all  of  the  districts,  each  district 
might  be  allowed  a  minimum  of  two  members  in 
the  divisional  congress,  with  one  additional  mem- 
ber for  each  5,000  workers  in  excess  of  10,000. 
Under  .such  an  arrangement,  a  district  with  25,000 
worker's  would  have  five  representatives  in  the 
congress,  and  so  on. 

B.  The  members  of  the  district  committees  are  the 
candidates    for    election    to    the    divisional    con- 


d.  The  divisional  congress  meets  at  least  once  in  each 
year,  and  within  thirty  days  of  its  election. 

c.  The  divisional  congress  picks  from  its  own  member- 
ship a  divisional  executive  committee,  which  meets 
at  intervals  through  the  year,  and  is  responsible  for 
the  afl'airs  of  the  division  when  the  divisional  con- 
gress is  not  in  session. 

f.  The  divisional  congress  selects  from  its  membership 
a  divisional  executive  board  which  sits  constantly. 
Its  members  are  members  of  the  division  executive 


ECONOMIC  SELF-GOVERNMENT  95 

committee,  and  it  is  responsible  to  the  division  execu- 
tive committee  when  the  division  congress  is  not  in 
session. 

g.  Each  divisional  executive  board  picks  a  staff  of  ex- 
perts or  engineers,  who  are  approved  by  the  divisional 
executive  committee,  and  who  constitute  the  technical 
general  staff  of  the  division. 

4.  SUGGESTIONS  FOR  THE  ORGANIZATION  OF  A  GENERAL  IN- 
DUSTRIAL  GROUP   ON  A   WORLD   BASIS. 

a.  The   general  industrial   group,    or  general   occupa- 
tional group,  would  be  a  major  subdivision  of  the 
world's  industrial  life.     All  of  those  producers  who 
were    engaged    in    like    activities   would    be    classed 
together,  and  the  number  of  these  world  industrial 
groups  would  be  determined  as  a  matter  of  adminis- 
trative  convenience.      The   producers   of  the  world 
might,   for  example,   be  divided  into  the  following 
major  industrial  groups:  agriculture,  the  extractive 
industries,  manufacturing,   transport,  trade,   house- 
keeping, and  general  (miscellaneous)  workers.   Some 
such  economic  grouping  of  producers  would  include 
all  who  are  employed  in  producing  goods  and  ser- 
vices and  would  provide  the  basis  for  an  alignment 
of  the  world's  population  in  terms  of  what  the  pro- 
ducers did  rather  than  in  terms  of  where  they  lived. 

b.  Thus  far,  in  the  detailed  statement  of  local,  district 
and  divisional  organization,  only  the  barest  outline 
has     been     given,     first     because     it     was    the.     in- 
tention   to     discuss    the    world     economic     problem 
rather      than      the      local      problem,      and      second 
because    the    internal    structure    OL    each    industry 
would  be  determined  largely  by  that  industry,  and 
would,  of  necessity,  vary  considerably  -\vith  the  vary- 
ing   industrial    conditions.      The    organized    world 
industries,  however,  are  the  economic  framework  of 


96  THE  NEXT  STEP 

the  producers'  society,  and  their  organization 
becomes  a  matter  of  the  most  supreme  concern  to 
producers  everywhere. 

c.  The  control  of  affairs  in  each  of  the  major  industrial 
groups  would  be  vested  in  a  congress  of  from  500  to 
1000  members,  meeting  at  least  as  often  as  once  in 
each  January. 

A.  The  members  of  the  divisional  congresses,  within 
these  same  industrial  groups,  are  the  candidates 
for  election  to  the  world  congress.      They  are 
voted  for  directly  by  the  workers  in  each  division, 
and  if  they  are  elected  to  the  industrial  congress, 
the  places  thus  made  vacant  in  the  divisional 
congress  are  filled  by  special  election. 

B.  Each  division  would  send  a  minimum  of  twenty 
members  to  the  industrial  congress,  and  an  addi- 
tional   member     for     each    specified     quota    of 
workers. 

d.  The   industrial   congress   would   pick   an   executive 
committee  from  its  own  membership.     This  commit- 
tee would  meet  at  regular  intervals,  and  would  be 
responsible  for  the  conduct  of  the  industry  when  the 
industrial   congress  was  not  in  session. 

e.  The   congress   would   pick   a   number   of   additional 
committees  to  deal  with  the  various  problems  arising 
within   each  industry.     These  committees  might  be 
called  policy  committees.     Tn  practice,  and  for  the 
sake;  of  greater  effectiveness,  it  might  be  desirable  for 
the  industrial  congress  to  select  a  chairman,  permit 
him  to  pick  his  committee  from  the  membership  of 
the  congress,  and  then  endorse  the  whole  committee, 
very  much  as  a  minister  in  a  responsible  government 
picks   his    cabinet.      Since   these    committees   would 
be  concerned  with  problems  of  policy  on  one  side  and 
with  problems  of  administration  on  the  other,  such 


ECONOMIC  SELF-GOVERNMENT  07 

a  method   would   develop    a   far   more   harmonious 
working  group. 

f.  The    chairmen    of   these    various    policy    committees 
together  with  the  chairman  of  the  executive  commit- 
tee would  constitute  the  board  of  managers  of  the 
industry,  which  would  be  the  responsible  directing 
authority  for  the  world  industrial  group. 

g.  Connected    with    each    of    these    committees,     and 
selected  by  them,  there  would  be  a  board  of  engineers 
and  experts,  responsible  for  the  technical  side  of  the 
industry 

A  diagram  may  help  to  visualize  the  relations  existing 
between  the  various  parts  of  the  world  organization,  (p.  98.) 

10.    The  Progress  of  8  elf -government 

This  outline  of  the  organization  of  one  of  the  major  world 
economic  units  is  tentative  and  suggestive  rather  than  arbi- 
trary or  final.  The  details  of  the  plan  would  necessarily  vary 
from  one  industry  to  another  and  from  one  district  and  one 
division  to  another.  All  such  matters  of  detail  would  be 
subject  to  the  decisions  made  by  the  district  committees,  by 
the  divisional  congresses  and  by  the  world  congress  of  each 
industrial  group, 

The  aim  of  the  plan  is  to  build  up  an  economic  structure 
that  will  be  efficient  and  at  the  same  time  sufficiently  elastic 
to  meet  the  changing  needs  of  the  times.  Product  ion  is  always 
necessary,  but  the  methods  vary  from  one  au'e  to  another. 
The  changes  which  occur  in  the  economic  activities  of  a  popu- 
lation must  find  their  counterpart  in  the  chana'ing  economic 
structure  of  that  community,  otherwise  disorganization  ami 
chaos  will  inevitably  result. 

The  means  best  calculated  to  preserve  the  efficiency  and 
to  guarantee  the  mobility  of  the  economic,  life  of  the  world 
is  self-government.  Xo  other  known  means  of  directing  and 
controlling  social  affairs  will  secure  permanent  results,  either 
of  efficiency  or  of  mobility. 


PLAN    FOR    THE    WORLD    ORGANIZATION    OF    ONE 

INDUSTRIAL   OR  OCCUPATIONAL 

GROUP 


Industrial     Board     of     Managers, 
composed    of    committee    chairmen 


Sit? 
Continually 


Industrial 
Executive 
Committee 


ECONOMIC  SELF-GOVERNMENT  99 

Self-government  is  present  to  some  decree  in  every  form 
of  society  of  which  there  is  a  record.  Under  some  circum- 
stances it  is  confined  to  one  caste  or  class.  Again  it  is  the 
right  of  the  whole  society.  In  one  place  it  is  confined  to 
political  affairs  alone.  In  others  it  is  present  in  all  public 
activities.  Everywhere,  however,  there  is  self-government  of 
some  kind. 

Recent  generations  have  devoted  their  attention  lo  the 
fostering  of  political  self-government,  and  to  the  organization 
of  a  multitude  of  voluntary  associations  based  on  the  self- 
governing  principle.  Generation  by  generation  the  peoples 
have  been  prepared  to  assume  an  ever-increasing  authority 
over  the  complicated  mechanism  of  public  affairs.  Self- 
government  in  the  clan  or  in  the  agricultural  village  was  a 
simple  matter  compared  with  the  management  of  public 
affairs  in  a  modern  economic  society.  It  is  this  task,  however, 
that  confronts  the  present  generation.  The  principle  of  self- 
direction,  extended  into  the  complex  field  of  economic  rela- 
tionships, must  be  relied  upon  to  pull  together  the  scattering 
threads  of  economic  activities.  That  this  task  involves  an 
immense  amount  of  propaganda  and  educational  activity, 
goes  without  saying.  That  it  is  the  only  sound  basis  for  sor-ial 
procedure  seems  to  be  the  conclusion  inevitably  arising  out  of 
a  careful  examination  of  the  premises. 

The  organization  of  sound  economic  grou] 
in  the  field  of  social  engineering.  The  pre 
industrial  populations  for  economic  s  'If-gover; 
!c-m  in  the  iV-ld  of  education.  Both  of  these 
the  root  of  anv  effective  reorganization  of  the  world  's  economic 
affairs. 


V.     A  WORLD  PRODUCERS'  FEDERATION 
1.     World  Outlook 

Ax  organization  of  producers  into  groups  corresponding 
with  their  occupations  lays  the  basis  for  world  thinking  and 
world  federation.  Each  active  member  of  society  would  then 
be  directly  associated  with  a  group  that  was  world  wide  in 
its  scope,  so  that  transport  workers,  miners,  farmers  and 
other  producers  would  be  in  constant  touch  with  similarly 
occupied  men  and  women  on  every  continent. 

One  of  the  principal  disadvantages  of  the  present  organiza- 
tion of  society  is  the  sectionalism  arising  out  of  the  political 
divisions  established  by  national  boundary  lines.  In  a  world 
whore  all  of  the  producers  were  organized  along  lines  corre- 
sponding with  their  occupations,  sectionalism  would  have 
much  Irs*  chance  to  play  a  role  in  the  lives  of  the  people. 
To  be  sure  issues  would  arise  between  the  various  economic 
groups,  but  each  individual  would  be  affiliated  with  a  world 
organization,  and  the  scope  of  his  interests  and  of  his  thinking 
would  therefore  be  much  broader  than  it  is  under  the  present 
system,  of  political  divisions.  World  thoughts  and  world 
views  on  a  hitherto  unknown  scale  would  be  the  logical  out- 
come of  world  economic  affiliations  in  producer  groups. 

The  organization  of  society  along  the  lines  of  production 
will  therefore  necessarily  broaden  the  outlook  of  those  whose 
visions  are  now  limited  by  the  confines  of  a  political  state, 
and  the  present  ties  of  loyally  which  bind  the  individual 
within  a  geographic  area  would  then  attach  him  to  a  world 
organization  and  would  compel  him  to  think  in  world  terms. 
That  there,  are  limitations  imposed  by  the  affiliation  of  the 
individual  with  an  economic  group  cannot  be  denied,  but 

100 


A.  WORLD  PRODUCERS '  FEDERAT I  OX    ]  01 

such  limitations'  are  far' less   drastic  than  those  prescribed 
by  restricted  geographic  areas. . 

2.     The  Need  of  Organization 

The  organization  of  society  .in  terms  of  economic  activity, 
building  up  through  intimate  local  units,  through  district 
and  divisional  units;  to  world  organization  within  the  major 
industrial  groups  does  not  provide  any  basis  for  effective 
co-operation  between  the  individual  groups.  The  metal 
workers  of  the  world  might  produce  machinery  and  the 
farmers  wheat,  but  by  what  means  are  they  to  exchange  their 
product  and  regulate  their  output  in  a  way  to  secure  the 
maximum  of  advantage  on  both  sides? 

There  are  two  outstanding  characteristics  of  present-day 
economic  life.  One  is  its  world  scope.  The  other  is  the 
intimate  and  constant  inter-working  of  the  various  parts  of 
the  economic  machine  so  well  described  by  -T.  A.  llob>on  in 
his  book  on  "The  Industrial  System."  Agriculture,  mining, 
transportation,  manufacturing  and  so  on  are  all  linked  into 
one  functioning  mechanism.  To  be  sure  there  are  times  when 
the  machine  does  not  work  very  well — as  after  a  great  economic 
depression,  but  the  purpose  is  there,  the  intermittent  working 
harmony  of  the  mechanism  is  unquestioned,  the  experience 
in  world  economic  activity  is  a  permanent  part  of  the  heritage 
of  the  race,  and  there  remains  only  the  ta^k  of  making  world 
economic  relations  more  effective  and  more  permanent  than 
they  have  been  in  the  past.  The  ice  has  hern  broken  in  the 
sea  of  world  economic  life  and  the  human  race  has  already 
taken  many  a  plunge  in  its  waters. 

Under  any  form  of  society  that  can  be  foreseen  in  the 
immediate  future,  the  need  of  close  co-operation  between  the 
various  parts  of  the  world  economic  mechanism  will  tend  to 
increase  rather  than  to  diminish,  and  it  is  therefore  of  great 
importance  to  have  at  hand  a  means  of  maintaining  and 
facilitating  the  contacts  between  the  different  economic 


102  THE  NEXT  STEP 

The  present  system  has  given  economic  life  an  exceptional 
opportunity  to  grow  within  the  boundaries  of  single  nations, 
and  to  co-operate  within  those  areas  that  are  not  sacred  to 
competition.  Meanwhile  the  need  for  world  co-operative 
organization  has  grown  steadily  with  the  evolution  of  economic 
life  on  a  world  plane,  fostered  by  some  of  the  clearest  visioned 
among  the  men  who  are  responsible  for  the  direction  of  the 
economic  world. 

3.     Present-day  Economic  Authority 

Under  the  present  system  of  society  the  linking  together 
of  the  various  parts  of  the  economic  world  is  a  private 
matter.  Mines,  factories  and  mills  use  the.  railroads  as  a 
means  of  transporting  their  products.  The  intermediary  in 
this  as  in  other  transactions  between  the  various  branches 
of  the  economic  world  is  the  bank.  Thus  the  banker,  who 
provides  the  credit,  and  through  whose  private  institution 
financial  transactions  take  place,  becomes  the  arbiter  of 
economic  destiny,  rendering  decisions  upon  which  the  well- 
being  of  the  masses  or  producers  depends,  yet  wholly  irre- 
sponsible for  the  results  that  follow  on  these  decisions.  Using 
the  people's  money,  possessed  of  vast  authority  over  the  jobs 
and  the  property  of  the  producers,  the  banker  is  answerable 
only  to  other  financiers  who  have  a  similar  power  and  who 
enjoy  a  similar  freedom  from  social  restraint.  Within  the 
scope  of  the  law  prohibiting  fraud  and  theft,  and  subject  to 
the,  limitations  of  conscience  the  bankers  and  their  confreres 
follow  the  dictates  of  their  own  inclinations.  Quite  naturally, 
under  the  circumstances,  they  have  grown  rich,  and  powerful 
far  beyond  the  extent  of  their  riches,  since  their  control  of 
the  credit — upon  which  the  whole  business  community 
depends — and  their  easy  access  to  other  people's  money  in  the 
form  of  insurance  premiums  and  savings  bank  deposits,  place 
them  in  a  strategic  position  which  permits  them  to  dominate 
and  to  dictate  outside  the  boundaries  of  their  ownership. 


A  WORLD  PRODUCERS'  FEDERATION    10:] 

The  power  now  exercised  by  the  bankers  will,  in  a  pro- 
ducers' society,  be  under  the  control  of  public  servants  whose 
business  it  will  be  to  link  up  the  various  lines  of  activity 
within  the  economic  machine. 

At  one  stage  in  the  development  of  the  world's  economic 
life  it  was  necessary  to  take  out  of  the  hands  of  private 
individuals  the  right  to  issue  money,  and  to  make  of  money 
issue  a  public  function.  To-day  no  one  questions  the 
desirability  of  having  money  issued  by  public  authority,  and 
the  right  to  issue  money  is  recognized  as  one  of  the  important 
attributes  of  sovereignty. 

Meanwhile  there  has  been  a  change  in  the  character  of 
the  medium  of  exchange.  Credit  and  not  money  is  employed 
to  adjust  most  of  the  relations  between  economic-  groups. 
In  1920,  for  example,  the  total  amount  of  money  in  circula- 
tion in  the  United  States,  including  gold,  silver,  and  all  forms 
of  paper  money  was  only  6,088  millions  of  dollars,  while  the 
bank-clearings — that  is,  the  exchange  of  cheeks  between 
banks— totaled  462.920  millions  of  dollars.  If  to  these  f^un-s 
are  added  the  volume  of  checks  drawn  and  accepted  on  the 
same  bank,  the  amount  of  commercial  paper  discounted,  olc., 
some  idea  may  be  obtained  of  the  importance  of  credit  tran- 
sactions as  compared  with  the  use  of  cash  under  the  present 
system.  Nevertheless,  while  th"  riu'ht  to  issue  money  h;is 
become  a  public  function,  the  right  to  issue  credit  remains  in 
the,  hands  of  private  bankers. 

Under  a  producers'  society,  the  relation  between  the  vari- 
ous groups  of  producers  will  be  maintained  through  a  system 
of  bookkeeping  that  will  charge  against  each  economic  group 
what  it  uses  in  the  form  of  raw  materials,  machinery  and  the 
like,  and  will  credit  each  group  with  ihe  value  of  its  product. 
Such  a  system  is  in  voo-ue  in  any  lartre  industrial  plant,  where 
each  department  keeps  its  own  accounts,  changes  the  other 
departments  -\virh  what  they  get  fr»m  it  and  credits  them  v::ih 
what  thev  receive.  The  whole  is  handled  through  a  central 


104  THE  NEXT  STEP 

book-keeping  system.  The  principle  of  social  book-keeping 
is  not  new,  therefore,  but  is  an  essential  link  in  any  large  and 
complex  economic  organization.  It  merely  remains  to  apply 
the  principle  to  producers'  groups  instead  of  to  the  affairs  of 
a  private  banker  or  to  the  book-keeping  system  of  some  great 
industrial  trust. 

How  shall  a  joint  control  be  exercised  by  all  of  the  pro- 
ducers' groups  over  those  economic  activities,  such  as  the 
handling  of  credit,  or  social  book-keeping,  that  affect  more 
than  one  of  them?  The  obvious  answer  is  that  they  can  be 
transacted  through  some  organization  in  which  all  of  the 
groups  participate  on  a  footing  of  economic  equality. 

Common  interests  will  sooner  or  later  compel  common 
action,  or  action  through  a  joint  board.  The  point  has  been 
reached  in  the  economic  history  of  the  world  where  some 
such  common  action  of  the  producing  groups  is  vitally 
essential  to  their  continued  well-being.  The  logic  of  economic 
development  is  compelling  men  to  turn  from  the  owners' 
society  of  the  present  day  to  a  producers'  society,  organized 
by  the  producing  groups  and  functioning  in  those  cases  where 
the  single  group  of  producers  finds  effective  function 
impossible. 

4.     Federation  as  a  Way  Out 

Experience  has  shown  that  the  best  way  to  secure  co-opera- 
tion among  a  number  of  groups  having  more  or  less  divergent 
interests  is  through  a  federated  or  federal  system  of  organiza- 
tion, under  which  each  of  1he  constituent  groups  retains 
control  over  those  matters  which  relate  exclusively  to  the 
affairs  of  that  group,  while  all  matters  affecting  the  well-being 
of  two  or  more  groups  are  handled  through  the  central  organi- 
zation or  federation. 

The  T  nited  States  of  America  is  an  association  of  sover- 
eign states,  each  of  which  retains  the  right  to  decide  those 
matters  which  are  of  importance  to  that  state  alone,  while 


A  WORLD  PRODUCERS'  FEDERATION    105 

all  questions  of  interstate  concern  are  automatically  referred 
to  the  Federal  Government.  At  the  same  time,  matters  of 
common  concern  to  all  of  the  states  such  as  the  coinage  of 
money,  relations  with  foreign  governments,  the  regulation  of 
commerce  with  other  nations  and  between  the  states,  and  the 
like,  are  also  under  exclusively  federal  jurisdiction.  By  this 
means,  those  questions  which  are  of  local  moment  may  he 
settled  within  the  state  in  which  they  arise,  while  all  questions 
affecting  the  interests  of  more  than  one  state,  and  those  having 
to  do  with  the  common  interests  of  all  the  stales,  fall  within 
the  jurisdiction  of  the  Federal  Government. 

The  organization  of  business  has  followed  similar  lines  of 
federation.  During  the  early  years  of  capitalism  there  was  a 
strong  tendency  to  concentrate  all  of  the  power  of  a  given 
business  at  one  point,  and  in  the  hands  of  one  man.  "With 
the  growth  of  large  enterprises,  however,  such  centralization 
became  unworkable.  Instead  of  a  single  generalissimo,  busi- 
ness organized  the  general  staff.  The  corporation  with  its 
board  of  directors  (executive  committee)  helped  to  make  the 
transition,  and  when  the  "United  States  Steel  Corporation 
was  formed,  at  the  peak  of  the  period  of  American  trust 
organization,  its  constituent  companies  were  given  large  scope 
for  individual  initiative  and  activity.  The-  tendency  toward 
departmental  autonomy  in  large  businesses  is  also  very 
marked.  Bitter  experience  with  "one  man"  concerns  and 
top-heavy  organizations  convinced  business  m^n  1h;;t  the  road 
to  success  lay  along  the  path  of  federated  autonomous  units; 
rather  than  of  highly  centralized  hnrcau'-racii  s. 

The  labor  movement  has  had  the  same  experience  in  many 
of  the  more  advanced  countries  of  the  world.  There  has  h.»on 
almost  a  century  of  local,  independent  groups,  each  one  ,•  i-ting 
on  its  own  initiative.  The  failure  of  such  a  divide-and-perisk 
course  was  predicted  from  the  beirmninu.  Then  there  have 
been  highly  centralized  organizations  of  considerable  extent 
and  power,  like  the  American  Knights  of  Labor,  which 


100  THE  XEXT  STEP 

flourished  for  a  time  and  then  dried  up  and  blew  away. 
But  out  of  the  hundred  years  experience,  the  labor  movement, 
as  at  present  organized  in  Germany,  Britain,  Belgimn,  the 
United  States,  etc.,  is  an.  exponent  of  the  social  principle  that 
local  autonomy  must  be  preserved  in  all  local  matters,  while 
questions  of  general  concern  must  be  referred  to  some  general 
body  which  represents  the  general  interest. 

One  of  the  most  insuperable  difficult ies  before  the  world 
at  the  present  time  is  the  lack  of  any  central  authority  to 
which  may  be  referred  those  matters  of  general  and  vital 
concern  that  affect  the  peoples  of  more  than  one  nation.  The 
peoples  feel  this  lack.  They  are  aware  of  the  fact  that  indus- 
try, science,  commerce,  art,  literature  have  ail  leaped  the 
national  boundary  fence.  This  is  particularly  true  of  "Western 
Europe,  whose  economic  life  is  closely  interwoven,  and 
dependent  on  certain  centers  of  coal  and  iron  production,  and 
whose  political  boundaries  were  determined  before  the  present 
economic  system  was  dreamed  of.  The  importing  of  food 
and  of  raw  materials,  the  development  of  markets  and  of 
investment  opportunities,  the  organization  of  means  for  the 
transport  and  the  exchange  of  commodities  are  matters  of 
common  concern  to  all  of  the  important  countries  of  Western 
Europe.  Before  the  outbreak  of  the  world  war,  Europe  was 
an  economic  net-work  of  transport,  finance  and  trade,  and 
as  a  matter  of  course,  communication  and  travel  were  common 
between  all  of  the  industrial  countries.  But  while  there  were 
so  many  matters  of  coDiinon  concern  to  Britain,  France,  Ger- 
many. Pus-'la,  Austria,  Belgium,  there  was  no  central 
authority  to  which  these  questions  could  be  referred  for 
decision  when  the  threads  of  mutual  interest  became  tangled. 
Instead,  secret  and  competitive  statecraft  made  the  tangle 
worse.  The  mass  of  conflict  mo-  jurisdictions  and  of  petty 
jealousies  that  have  grown  up  among  tlie  two  score  of  inde- 
T):'?  :  .--'••,••  r<  ign  states  of  Europe  made  a  conflict  almost 

inevil 


A  WORLD  PRODUCERS'  FEDERATION    107 

Under  a  federated  system  of  the  European  states,  civil 
war  would  be  possible,  but  the  chances  of  a  conflict  would 
be  greatly  lessened  by  the  presence  of  a  central  authority 
before  whom  questions  of  divergent  interests  could  lie  publicly 
threshed  out.  For  when  issues  arise  between  organizations 
of  equal  and  parallel  jurisdiction,  a  conflict  can  frequently  bo 
avoided  if  there  is  some  commonly  recognized  and  superior 
authority  before  whom  the  points  in  dispute  may  be  laid,  and 
whose  decision  will  prove  binding  on  both  parties. 

"What  is  so  obviously  true  of  Europe  is  also  true  of  the 
remainder  of  the  Western  world,  though  to  a  b>sser  degree. 
The  economic,  social  and  cultural  life  of  civilization  has 
passed  beyond  national  boundaries.  Until  this  fact  is  recog- 
nized, and  until  some  organization  is  created  with  a  jurisdic- 
tion as  wide  as  the  problems  at  issue,  misunderstanding, 
conflict  and  catastrophe  will  continue  to  occur. 

5.     Building  a  Producers'  Federation 

The  first  step  in  economic  reorganization  is  the  recognition 
or  establishment  of  local  district,  divisional  and  world 
groups  of  producers  affiliated  along  the  lines  of  tlieir  economic 
activities.  This  is  a  simple  acceptance,  in  social  terms,  of  the 
economic  forms  that  have  been  evolving  since  the  industrial 
revolution. 

The  second  step  in  economic  reorganization  is  the  recogni- 
tion or  establishment  of  local,  district,  divisional  and  world 
federations  of  the  local,  district,  divisional  and  world  indus- 
trial groups.  This  second  stop  must  be  taken  in  order  that 
there  may  be  som"  authority  competent  to  deal  with  those 
problems  which  are  common  to  two  or  more  of  the  groups  in 
question. 

There  are  two  general  types  of  problems  that  the  federa- 
tions of  industrial  groups  will  be  r-.-illed  upon  to  handle; 

1.  Those  problems  involving  inter-relations  between  the 
various  producing  Croups,  su«-h  as  the  factory  workers. 


108  THE  XEZT  STEP 

transport  workers,  agricultural  workers  and  the  like, 
that  must  exchange  their  products  and  receive  from  one 
another  the  materials  upon  which  existence  depends. 
2.  Those  problems  which  are  common  to  all  producing 
groups  simply  because  they  are  common  to  men  and 
women  who  are  trying  to  live  and  to  function  together. 
The  water-supply,  roads,  education,  are  questions  of 
this  type. 

Problems  of  the  second  sort,  and  the  issues  raised  by  them, 
cannot  be  entered  upon  at  this  point.  The  same  federal 
authority  that  is  charged  with  the  control  over  inter-industrial 
problems  will  likewise  charge  itself,  in  each  instance,  with 
these  common  questions  not  immediately  related  to  industry. 
This  is  not  an  attempt  to  under-estimate  the  importance 
of  non-industrial  problems,  but  to  confine  attention,  for  the 
moment,  to  matters  directly  related  to  production,  with  the 
conviction  that  when  a  mechanism  is  developed  capable  of 
handling  the  industrial  problems  there  will  be  less  difficulty 
in  taking  care  of  those  not  so  closely  related  to  industry. 

6.     Four  Groups  of  Federations 

The  issues  arising  between  industrial  groups,  and  those 
problems  common  to  all  groups,  will  best  be  handled  by  fed- 
erations having  a  jurisdictional  scope  parallel  to  that  of  the 
separate  groups  of  which  the  federations  are  composed.  If 
these  component  groups  are  local  economic  units,  the  federa- 
tion will  be  local  in  character.  If  they  are  district  economic 
units,  the  federation  will  have  a  district  as  its  sphere,  and 
so  on.  P>y  this  moans,  there  will  be  created  a  series  of  federa- 
tions or  joint  organizations,  beginning  with  the  federation  of 
local  economic  units,  and  ending  with  a  federation  of  world 
industries.  Throughout  this  enlarging  series  of  federations 
the  principle  of  local  autonomy  will  be  maintained  in  all  of 
its  rigor,  and  no  matter  will  be  referred  to  a  federation  that 
can  be  handled  by  a  local  group.  At  the  same  time,  the 


A  WORLD  PRODUCERS'  FEDERATION    100 

principle  of  federal  authority  will  be  asserted,  and  those 
matters  that  concern  the  welfare  of  more  than  one  group  of 
parallel  jurisdiction,  will  be  referred  automatically  to  the 
federal  authority  under  whose  control  the  group  in  question 
falls. 

The  most  elemental  of  the  federations  would  be  the  local 
producers'  federation,  which  would  correspond,  quite  accu- 
rately, to  the  town  or  the  city  of  the  present  day,  save  that 
its  size  and  character  would  of  necessity  be  much  better  reg- 
ulated than  the  character  and  si/e  of  the  present-day  town 
or  city.  The  modern  city  has  been  built  as  a  profiteer's 
paradise.  From  the  construction  of  houses  to  the  erection  of 
office  buildings,  the  one  foremost  question:  "What  per  cent 
will  it  yield?"  has  been  the  guiding  principle  behind  city 
construction.  The  local  industrial  federation  will  have,  as  its 
chief  task,  the  provision  of  a  living  and  working  place  for 
people,  hence  the  character  of  the  industrial  community  will 
be  determined  with  a  view  to  the  well-being  of  the  inhabitants 
rather  than  to  the  profit  of  landlords. 

The  local  federation  would  be  under  the  control  of  a  local 
council,  the  members  of  which  would  he  elected  by  the  pro- 
ducing units  or  groups  composing  the  local  federation,  very 
much  as  the  modern  city  is  managed  by  a  council  ehvt"d  In- 
wards or  aldermanic  districts.  Except  for  the  choice  of  rep- 
resentatives on  the  council  by  occupational  groups,  rather 
than  by  geographic  divisions,  the  local  federation  would 
closely  resemble  the  municipal  government  of  the  present  day. 
In  addition  to  its  present  functions,  however,  it  would  assume 
the  task  of  dealing  with  issues  arising  between  two  or  more 
of  the  local  producing1  groups.  That  is.  it  would  have  eco- 
nomic as  well  as  political  functions,  although  it  would  not 
necessarily  carry  on  any  more  productiv0  enterprises  ''gas, 
water,  house-construction,  abbatoirs)  than  do  municipalities 
at  the  present  time. 

The  local  producers'  federation  would  be  responsible  for 


110  THE  NEXT  STEP 

two  chief  lines  of  activity.  On  the  one  hand,  it  would  seek 
to  maintain  working  relations  between  the  various  local 
economic  groups  by  adjudicating  those  local  questions  that 
affected  two  or  more  of  the  groups.  On  the  other  hand,  it 
would  take  charge  of,  and  administer,  those  matters  of  com- 
mon concern,  such  as  the  water  supply,  the  local  educational 
institutions,  and  so  on.  This  second  group  of  functions  would 
be  similar  to  those  now  performed  by  the  city  council,  the 
board  of  health,  the  board  of  education. 

There  would  be  a  local  producers'  federation  wherever  a 
number  of  local  industrial  units  agreed  to  function  together. 
Counties,  cities,  boroughs,  and  school  districts  are,  at  the 
present  time,  organized  very  much  in  that  way. 

The  local  producers'  federation  would  therefore  differ 
little  from  the  existing  local  groups,  such  as  towns  and  cities, 
save  that  its  constituent  elements  would  be  occupational 
groups  rather  than  geographic  divisions,  and  that  it  would 
be  functioning  in  the  economic  as  well  as  in  the  political  field. 

The  second  scries  of  federations  might  be  called  the  pro- 
ducers' district  federations.  They  would  include  all  district 
industrial  groups  within  a  given  economic  field.  Such  a  dis- 
trict federation  would  correspond,  roughly,  to  the  present 
stale  as  it  exists  in  Mexico  or  Australia,  or  to  the  provinces  in 
Canada. 

The  district  federation  would  function  in  three  ways. 
First,  there  would  be  the  issues  arising  between  the  industrial 
organizations  that  composed  the  district  federation;  second, 
there  would  be  the  issues  arising  between  local  federations 
within  the  district,  and  third,  there  would  be  those  common 
matters,  like  health,  education,  highways  and  so  on. 

The  third  series  of  federations  would  be  the  divisional 
producers  federal  ions,  which  would  correspond,  roughly,  to 
sue])  aggregations  o!'  states  as  the  Commonwealth  of  Australia 
or  the  Tniled  States  of  America.  The  boundaries  of  such  a 
federation  would  follow  the  boundaries  of  the  principal  land 


A  WORLD  PRODFCERS'  FEDERATION    in 

areas  and  the  chief  population  centers.  North  America, 
South  America,  South  Africa,  the  Mediterranean  Basin, 
Northern  Europe,  Northern  Asia,  Eastern  Asia,  Southern 
Asia  and  Australia  would  furnish  a  working  basis  for  sepa- 
rating the  world  into  such  geographical  divisions.  Each  of 
these  divisional  federations  would  function  along  the  same 
general  lines  as  the  local  and  district  groups. 

The  fourth,  in  the  series  of  federations,  would  be  the 
world  producers'  federation,  which  would  be  an  organization 
composed  of  all  of  the  major  industrial  groups.  These  groups, 
each  of  which  would  be  organized  on  a  world-wide  basis, 
would  unite  in  the  world  producers'  federation  in  order  to 
further  those  interests  that  were  of  consequence  to  two  or 
more  of  them,  as  well  as  those  common  interests  that  were  of 
concern  to  all  alike.  The  world  producers'  federation  would 
be  built  on  the  same  principle  as  the  local  producers'  federa- 
tion, but  unlike  this  latter  federation,  the  world  federation 
has  no  prototype  existing  at  the  present  time. 

The  world  producers'  federation  would  be  a  world  author- 
ity, linking  up  those  interests  of  world  consequence  that  are 
now  waving  about  like  cobwebs  in  the  wind. 

Throughout  its  entire  course  this  outline  has  been  designed 
in  such  a  way  as  to  separate  sharply  the  producing  units  and 
the  administrative  groups  (federations).  The  local,  district, 
divisional  and  world  industrial  unils  are  th"  back-hone  of 
the  public  machinery  in  a  producers'  society.  For  the  pur- 
poses of  facilitating  the  work  of  administration,  these  pro- 
ducers' groups  are  brought  together,  at  various  points,  in 
local,  district,  diviMonal  and  in  a  world  producers'  federation. 
all  of  which  federations  derive  the'r  power  directly  from  the 
industrial  producers'  groups.  The  world  producers'  federa- 
tion therefore  lias  no  direct  illations  w;ih  fh  '  local  producers' 
federation,  any  more  than  the  government  of  a  county,  in  a 
modern  state,  lias  with  the  central  federal  authority.  The 
authority  of  the  world  producers'  federation,  like  that  nf  the 


112  THE  NEXT  STEP 

local,  district  and  divisional  producers'  federations,  is  derived 
from  its  constituent  industrial  member  groups,  and  is  confined 
to  the  questions  that  are  of  immediate  concern  to  a  number  of 
them,  or  that  are  the  common  concern  of  all. 

This  arrangement  will  make  difficult  the  production  of  a 
state  of  present  type  which  has  drifted  far  away  from  some 
of  the  most  pressing  necessities  of  the  common  life,  and  into 
the  hands  of  politicians,— a  situation  that  permits  tyranny  on 
the  one  hand,  and  that  makes  any  adequate  check  on  the 
activities  of  these  political  rings  difficult  or  impossible.  This 
danger  would  be  considerably  reduced  by  delegating  admin- 
istrative power  to  the  federations,  holding  each  within  its 
prescribed  range,  and  keeping  the  real  power  in  the  hands  of 
the  local,  district,  divisional  and  world  industrial  groups. 

The  decision  of  the  world  producers'  federation  would 
therefore  be  binding  on  the  industrial  groups,  and  not  upon 
the  local,  district  and  divisional  producers'  federations,  except 
in  so  far  as  the  industrial  groups  compelled  these  federations 
to  follow"  the  policy  of  the  world  producers'  federation. 

Ft  is  probable  that  an  exception  would  have  to  be  made 
in  the  case  of  issues  arising  between  two  divisional  producers' 
federations.  The  burden  of  settling  such  an  issue  should  rest, 
however,  on  the  industrial  groups  rather  than  on  the  world 
producers'  federation. 

This  with-holding  of  authority  from  the  federations  in 
general,  and  from  the  world  producers'  federation  in  particu- 
lar may  be  open  to  criticism,  but  it  has  several  strong  points 
in  its  favor.  Through  its  control  of  resources,  transport  and 
the  like,  the  world  producers'  federation  will  wield  an  immense 
power.  Its  constituent  members,  having  aided  in  its  decisions 
of  policy,  may  follow  a  similar  course  of  action  in  the  divi- 
sional and  the  district  producers'  federations.  Again,  the 
alternative  to  the  organization  of  a  series  of  disconnected 
federations  is  a  centralized  bureaucracy  of  such  magnitude, 
and  holding  such  vast  power,  that  it  would  be  both  unwieldy 


A  WORLD  PRODUCERS'  FEDERATION    11:] 

and  dangerous,  beside  violating  that  very  essential  rule  of 
local  authority  in  local  affairs. 

The  separation  of  the  federations  would  compel  each  of 
them  to  specialize  on  particular  problems  of  administrative 
routine.  Questions  that  were  to  be  carried  to  wider  authori- 
ties would  be  carried  by  and  through  the  various  constituent 
industrial  groups. 

The  structural  organization  of  the  world  producers'  fed- 
eration would  be  similar  to  that  of  the  United  States  of 
America  or  that  of  the  Russian  Federated  Soviet  Republic. 
The  constituent  groups  would  be  economic  and  occupational 
rather  than  political  or  geographic,  but  the  principle  of  fed- 
erated autonomous  groups  would  be  the  same.  Each  of  the 
major  industrial  groups  that  belonged  to  the  world  producers' 
federation  would  have  sovereign  power  over  those  matters 
which  affected  that  group  alone.  The  federation,  on  the  other 
hand,  would  have  jurisdiction  over  matters  affect  inn'  two  or 
more  of  the  world  industrial  groups,  as  well  as  over  those 
matters  which  were  of  common  concern  to  all  of  the  member 
groups. 

7.     Tii.r  Form,  of  Organization 

The  general  lines  of  organization  for  the  world  producers' 
federation  would  be  somewhat  as  follow.-: 

1.  The  workers  in   each   of  the   major   industrial   e-roups 

would  vote  in  -Tune  of  each  year  for  the  members  of  a 

world  parliament  which  would  be  the  central  authority 

in  the  world  producers'  federation, 
•2.  The  world    parliament   would   consist   of    from   SOD   tn 

1000  delegates,  (de-led  in  each  of  the  major  imliu 

groups  by  the  producers  in  that  group. 


114  TIIE  NEXT  STEP 

tied  to  more  than  150  members  in  the  world  parlia- 
ment. 

b.  The    members   of   the   world    parliament   would    be 
elected  by  popular  vote  in  each  of  the  major  indus- 
trial groups,  the  franchise  being1  extended  to  all  pro- 
ducers, including  those  who  had  been  producers  and 
were  rendered  incapable  of  activity  through  age  or 
infirmity. 

c.  Each  industrial  division  would  be  entitled  to  at  least 
five  members  of  the  parliamentary  delegation  from 
that  particular  industrial  group,  but  the  details  of 
representation   from   each  of   the   major   industrial 
groups  would  be  left  in  the  hands  of  the  group. 

3.  The  world   parliament  would  be  elected  in  June  and 
would  meet  in  July  of  each  year.     Since  the  world  con- 
gresses of  each  of  the  major  industrial  groups  would 
meet  in  the  preceding  January,  they  would  have  six 
months  to  thresh  out  their  individual  problems,  before 
they  wf're  called  upon  to  consider  the  general  problems 
confronting  all  of  the  groups. 

4.  The  world  parliament  would  select,  from  its  own  mem- 
bership, an  executive  commit  tee  equal  in  size  to  ten  per 
cent  of  the  total  membership  of  the  parliament. 

a.  On  this  executive  committee  each  of  the  world  indus- 
trial   groups    would    be    entitled    to    at    least    five 
members. 

b.  Tin1  exffutive  committee  would  be  the  steering  com- 
mittee of  the  world  parliament,  and  when  the  world 
parliament   was   not   in   session,   the   executive   com- 
mittee  would  be  the  responsible  body. 

c.  The   executive   eommiltce  would   nvet   once   in   four 
months,  or  oft  oner  at  its  disci-Hiou. 

;>.  T!K'  executive  committee  would  select,  from  its  member- 
ship, a  number  of  administrative  board1--,  at  the  same 
•  naming  the  chairman  of  each  board.     Each  of  these 


A  WORLD  PRODUCERS'  FEDERATION    115 

administrative  boards  would  bo  charged  with  the  res- 
ponsibility of  handling1  a  unit  problem,  such  as  the  con- 
trol of  resources,  the  control  of  transport,  and  the  like. 
6.  The  chairmen  of  the  various  administrative  boards 
would  constitute  the  executive  heads  of  the  world  pro- 
ducers' federation.  They  mi^ht  be  called  the  world 
producers'  federation  board  of  managers.  This  board 
of  managers  would  be  responsible  to  the  world  parlia- 
ment executive  committee. 

a.  If,    at  any  time,   the   board  of   managers  failed   To 
secure  a  vote  of  confidence  from  the  world  parlia- 
ment executive;  committee,  on  any  natter  involvinc:  a 
question  of  general   policy,  the  board  of  managers 
would  be  automatically  dissolved,  and  the  executive 
committee   would   proceed   at   once   to   select  a   new 
board  that  would  replace  the  old  one. 

b.  If  the  executive  committee  failed  to  select  a   board 
of  managers  that  could  secure  a  vote  of  confidence. 
the  world  parliament  would  be  automatically  sum- 
moned to  meet  one  month  from  the  day  on  which 
this  failure  to  elect  occurred. 

c.  As  soon  as  it  convened,  the  world  parliament  would 
proceed,  as  a  first  order  of  business,  in  the  election 
of  aa  executive  committee  wlneh  \vnuld  function. 

d.  If  the  parliament  failed  to  elect  an   execuiivc  com- 
mittee capable  of  functioning,  (he  |iarli;n 

be  automatically  dissolved,  a  sp<  '''al  election  would 
beheld  within,  ten  days,  a  new  pa:'l:a  I  v  [Id  be 
selected,  and  would  assemble  thirty  days  from  the 
date  of  tills  speeial  elect :>  n. 

e.  By  these  means,  the  whole  machin 
producer.^'    federation    would    be    r 
ately  iv^'-i-.n^'ve  at  all  t  i:1:--   to  lie 
constituenc,  and   the  board   of   mai 


PLAN  FOR  WORLD  ECONOMIC  ORGANIZATION 


Board  of  Managers  consists  of  chairmen 
of  administrative  boards 


The  world 
executive 
with    ona 
member 
from    each 
industry 


Boards    of    ex- 
perts  iiml   special- 
with     chairmen 
by     the     world 
mmittee. 


World    Executive    Committee   consists    of 
ten   per    cent    of   World   Parliament 


Machine    Man- 

ii  t'ui-turiny   In- 
dustries 


Agricultural 

Industries 


A  WORLD  PRODUCERS'  FEDERATION"    117 

the   executive   committee  and  of  the  -world  parlia- 
ment, or  turn  the  -work  over  to  another  group. 
7.  The  world  parliament  would  exercise,  directly,  or  by 
delegated  authority,  all  legislative,  executive  and  judi- 
cial functions  that  pertained  to  its  activities.     It  would 
therefore  create  the  departments  or  subdivisions  neces- 
sary to   the   carrying   out  of  these  various   functions. 
The  members  of  the  world  parliament  would  lie  elected 
for  one  year,  subject  to  recall  at  any  time  by  the  con- 
stituency that    elected  them.      The   parliament   would 
decide  on  the  qualifications  of  its  own  members. 
This  proposed  plan  for  the  organization  of  a  world  pro- 
ducers' federation  will  be  made  clearer  by  a  diagram,  (p.  110.) 

8.     AH  Power  to  iJic  Producers! 

The  plan  for  a  world  producers'  federation  is  designed 
with  the  object  of  placing  all  power  in  the  hands  of  the  pro- 
ducers. The  society  of  the  present  day  vests  power — particu- 
larly economic  power — in  the  hands  of  the  owners  of  economic 
resources  and  machinery.  Their  public  institution  is  the 
capitalist  state,  and  their  rule  is  perpetuated  by  the  manipu- 
lation of  its  machinery. 

Tin  dor  this  order  of  society,  the  chief  emphasis  is  placed  on 
owning  rather  than  on  working.  The  largest  material 
rewards  and  the  greatest  amount  of  social  prestige  go  to  the 
owners.  The  present  society  sanctifies  ownership,  and  raises 
the  owner  to  a  position  of  moral  superiority. 

The  same  system  which  dignifies  ownership  can  scarcely 
recognize  work  as  of  supreme  social  consequence.  The  worker 
is  therefore  placed  in  a  position  inferior  to  that  of  the  owner. 
His  economic  rewards  are  less,  his  place  on  the  social  ladder 
is  lower,  and  his  children  are  taught  in  the  schools  the  neces- 
sity of  getting  out  of  his  class  into  the  society  of  those  who  are 
able  to  live  without  working. 

Tt    is  hardlv  necessarv   to   remark   that    in    a,   comrn.un, itv 


118  THE  NEXT  STEP 

dependent  for  its  existence  upon  labor,  the  teaching  of  such  a 
philosophy  points  the  way  to  class  conflict  and  ultimately  to 
social  disintegration.  If  the  community  is  dependent  upon 
production  for  its  existence,  there  must  he  sufficient  incentive 
to  continue  production,  otherwise  the  community  dies. 

The  disastrous  consequences  that  must  of  necessity  follow 
011  the  economic  order  as  it  is  constituted  at  the  present  time 
are  already  in  evidenc'v — strikingly  so  in  the  case  of  the 
European  breakdown.  The  owning  class  society  is  coming  to 
an  end — falling  of  its  own  weight.  The  time  has  come  when 
the  producers  must  take  the  control  of  the  world  into  their 
own  hands  or  .suffer  disaster. 

Man's  sense  of  justice  tolls  him  that  the  product  should 
belong  to  him  who  is  responsible  for  creating  it,  and  his  expe- 
rience teaches  him  that  human  beings  take  a  greater  interest  in 
that  which  is  theirs  than  they  take  in  the  property  of  another. 
The  results  of  production  should  go  to  the  producers;  the 
machinery  of  production  and  the  materials  entering  into 
production  should  beloncr  to  those  responsible  for  the  carrying 
on  of  the  productive  process.  How  shall  these  things  be? 
Only  when  the  producers  themselves  decide  to  make  them 
come  true. 

All  power  to  the  producers  ! 

This  sentence  carries  with  it  the  key  to  the  society  of  the 
future. 


VI.     WORLD    ADMINISTRATION 

1.     The  Basis  for  World  Administration 

WHEN  the  producers  of  the  world  are  organized  along  the 
lines  of  their  economic  activities,  and  are  federated  in  local, 
district  and  divisional  federations,  and  in  a  world  producers' 
federation,  the  structural  side  of  the  producers  society  will  be 
complete.  Such  a  structure  is  built  for  use,  not  for  appear- 
ance, and  its  effectiveness  depends  upon  the  way  in  which  it 
works.  The  handling  or  administration  of  the  producers 
society  is  therefore  the  determining  factor  in  its  success.  A 
•world  producers'  society  may  fail  as  miserably  as  any  other 
form  of  social  organization  unless  it  is  deliberately  utilized 
to  attain  the  ends  for  which  it  was  created. 

The  establishment  of  a  world  parliament  consisting  of 
representatives  from  the  major  industrial  groups  would 
create  an  authority  more  powerful  than  that  of  any  existing 
state  because,  in  the  first  place,  it  would  be  move  extensive 
than  any  existing  state.  But  even  supposing  that  one  of  the 
great  nations — Britain  or  the  1'nitcd  Slates — was  to  conquer 
the  world  and  attempt  to  administer  it.  tin1  world  producers' 
federation  would  be  far  more  effective  than  such  a  victor. 
because  its  rule  would  be  founded  on  the  will  and  on  the  con- 
sent of  the  governed  and  not  on  the  imperial  foundation  of 
organized  might.  The  world  producers'  federation  could 
therefore  look  for  a  support  from  its  constituency  that  no 
empire  could  hope  to  demand  from  its  conquered  subjects. 

The  centralization  involved  in  maintaininu1  the  authority 
of  an  imperial  ruling  class  in   a  larr/e  and  complex  state  is 
so  great  that  it  invariably  results  in  friction  and  disafif<' 
The  self-governing  stale,  less  efficiently  co-ordinated  and  cen- 

119 


120  THE  NEXT  STEP 

tralized,  still  has  a  far  better  chance  for  survival.  Its  energy- 
generating  centres  are  so  much  more  numerous  and  more 
localized  than  those  of  the  class  governed  empire  that  they 
necessarily  reach  a  larger  share  of  the  population.  The  roots 
of  the  self-governing  social  group  may  go  no  deeper  than  the 
roots  of  the  group  under  a  bureaucratic  government,  but  there 
are  more  of  them,  and  they  go  to  more  places.  The  founda- 
tions are  sounder  because  they  are  broader. 

In  addition  to  these  functional  advantages  of  self- 
government,  it  possesses  an  immense  asset  in  the  sense  of  pro- 
prietorship that  leads  the  citizens  of  a  self-governing  commu- 
nity to  stand  by  the  community  organization  because  they 
feel  that  they  have  built  it  and  that  it  is  their  own.  A  self- 
governing  community  therefore  carries  within  itself  the 
means  of  its  own  perpetuation  in  the  enthusiasm  and  devotion 
of  its  population  to  an  institution  in  which  they  feel  a  sense 
of  workmanship  and  of  the  pride  of  possession. 

A  world  parliament,  organized  on  the  basis  of  self- 
governing  industrial  groups,  would  be  unique  in  two  respects. 
First,  in  that  it  was  of  world  extent,  and  second  in  that  it  was 
built  upon  the  industrial  affiliations  of  its  citizenship.  If 
such  an  organization  were  handled  in  a  way  to  hold  the  alle- 
giance of  its  eonstituent  members,  its  decisions  on  matters  of 
world  importance  would  carry  an  immense  authority. 

2.     The  Field  of  World  Administration 

There,  in  fact,  would  be  the  test  of  world  government 
fffir-;iey — in  its  ability  to  leave  the  handling  of  local  problems 
to  local  groups,  and  to  concentrate  its  energies  on  the  admin- 
istration of  those  problems  which  have  assumed  a  distinctively 
world  scope.  Such  capacity  to  understand  the  difference 
between  the  business  of  local  crroups  and  the  business  of  the 
world  organization  would  be  the  touehstone  of  woi-ld  states- 
manship, the  criterion  by  which  the  master  political  minds  of 
the  age  could  be  tested.  The  short-sighted,  narrow-visioned 


WORLD  ADMINISTRATION  121 

leader  of  world  affairs  would  seek  to  grain  and  to  hold  power 
for  himself  and  for  his  immediate  local  interests.  The  pres- 
ence of  many  such  men  in  positions  of  power  would  soon  split 
the  world  government  into  a  series  of  factions,  each  one  seek- 
ing to  destroy  the  others  and  to  take  away  their  authority. 
Such  a  competitive  stage  would  represent  little  advance  over 
the  present  nationalism. 

A  world  government  has  no  virtue  in  itself,  and  may  as 
easily  degenerate  into  a  scramble  for  office  as  may  any  other 
phase  of  group  relationship.  Its  success  would  only  be  possi- 
ble where  its  power  was  strictly  limited  to  the  control  of  those 
matters  that  had  reached  a  plane  of  world  importance.  Even 
then  success  would  be  impossible  unless  those  responsible  for 
making  essential  decisions  saw  the  world  problems  as  wholes 
rather  than  as  localized  and  separable  problems. 

Grave  issues  hang  on  the  method  in  which  the  world  prob- 
lems are  approached  and  handled.  Success  is  not  assured  by 
any  means.  Still,  the  dangers  and  disadvantages  of  a  plan 
do  not  condemn  it  unless  they  outweigh  the  apparent 
advantages. 

The  people  of  the  western  world  face  a  number  of  serious 
problems  that  cannot  be  solved  by  the  existing  nations.  Some 
step  must  be  taken  to  cope  with  the  new  situation  that  h;is 
followed  on  the  heels  of  the  industrial  revolut  ion.  and  in  so  far 
as  the  actual  practices  of  life  have  evolved  to  a  world  plane, 
and  in  so  far  as  they  concern  the  workers  in  more  than  one 
industry,  it  must  be  apparent  that  nothing  less  than  some 
world  authority  will  suffice  to  cope  with  the  issues  that  they 
present. 

A  number  of  economic  questions,  such  as  the  control  of 
resources  and  of  transport,  have  already  passed  beyond  the 
boundary  of  the  individual  nation,  and  have  reached  a  stage 
of  world  importance  where  they  can  b^  handled  only  on  a 
world  basis.  In  the  normal  course  of  social  evolution,  other 
questions  will,  in  like  manner,  emcrcrc  into  a  place  of  world 


122  THE  NEXT  STEP 

consequence.  As  rapidly  as  such  developments  occur,  the 
administration  of  the  world  issues  must  be  delegated  to  the 
world  parliament  and  to  its  appointees  and  subordinate 
bodies. 

.'}.     Five  World  Problems 

There  are  a  number  of  problems  that  have  passed  beyond 
the  control  of  any  single  nation,  and  that  should  therefore  be 
made  the  subject  of  world  administration.  Among  them  are: 
(1)  the  control  of  resources  and  raw  materials,  (2)  transport 
(3)  exchange,  credit  and  investment,  (4)  the  world  economic 
budget,  and  (5)  adjudication  of  world  disputes.  Under  a 
world  producers'  federation,  the  administration  of  these  five 
problems  would  be  in  the  hands  of  five  administrative  boards 
selected  by  the  executive  committee  of  the  world  parliament. 

Each  administrative  board  would  select  and  organize  a 
staff  of  experts  and  specialists  in  its  own  field,  and  would 
present  the  outline  of  its  proposed  activities  to  the  world 
parliament  very  much  as  the  department  of  a  modern  govern- 
ment presents  its  budget  to  the  parliament  of  its  state.  This 
presentation  would  take  place  through  the  executive  committee 
of  Hie  world  parliament,  and  it  would  be  necessary  to  secure 
the  endorsement  of  that  committee  before  the  plan  could  go 
before  the  parliament. 

When  the  plan  was  approved,  the  administrative  board 
would  begin  to  function  as  a  part  of  the  machinery  of  the 
world  producers'  federation.  Thereafter  it  would  serve  as 
a  part  of  the  world  administrative  mechanism,  the  working 
organization  of  which  would  remain  intact,  even  should  there 
be  a  change  of  policy,  in  exactly  the  same  way  that  the 
department  of  state  or  of  agriculture,  in  any  modern  govern- 
ment, remains  intact  through  the  various  changes  of  party  in 
power. 

The  specialists  and  experts  who  made  up  the  staffs  of  the 
administrative  hoards  would  secure  their  appointments  as  the 


WORLD  ADMINISTRATION  1^:J 

result  of  civil  service  examinations,  and  would  continue  in 
their  positions  until  some  quest  ion  arose  as  to  their  efficiency. 
Each  administrative  board  would  he  organized  into  a  scries  of 
departments  corresponding1  with  the  unit  problems  coming 
before  the  boards,  with  one  specialist  or  department  head 
charged  with  the  direction  of  each  of  these  departments.  In 
the  raw  materials  and  resources  board,  for  example,  there 
might  be  one  department  for  each  of  the  more  important 
resources  such  as  coal,  iron,  copper,  cotton,  wool,  timber,  and 
the  like.  In  the  same  way,  the  work  of  the  transport  board 
might  be  divided  into  departments  covering  shipping  on  the 
high  seas,  inland  water  transport  between  divisions,  inter- 
divisional  land  transport,  aerial  navigation  not  wholly  within 
one  division,  and  so  forth.  In  each  instance.  1he  task  of  pro- 
viding an  adequate  supply  of  the  commodity  or  an  efficient 
service,  would  fall  to  the  department  or  departments  involved. 
while  the  administrative  board  itself  would  sit  as  a  court  of 
last  resort,  and  as  a  board  of  strategy  for  the  field  in  which 
it  was  functioning. 

The  administrative  board  would  thus  be  a  group  primarily 
of  experts,  charged  with  the  specific  task  of  handling  some 
problem  of  world  moment,  and  responsible  to  the  board  of 
managers  of  the  world  producers'  federation  for  the  success 
of  its  activities. 

4.      Work  of  the  Adiiiinixtrafh'r  B"<ir<l.< 

A  separate  administrative  board  would  he  established  to 
handle  each  of  the  important  administrative  problems  con- 
fronting the  world  producers'  federation.  At  the  outset  there 
would  be  such  problems  as  resources,  transport,  cred  !  and 
exchange,  budget,  and  the  adjudication  of  disputes  affeelimr 
more  than  one  division  or  more  ilian  one  of  the  major  indu<- 
trial  groups. 

It  is  neither  possible  nor  desirable  to  draw  up  a  working 
program  for  any  one  of  these  hoards.  Sa<-h  d  "  be 


124  THE  NEXT  STEP 

met  and  solved  when  the  task  of  administrative  work  begins. 
At  this  point  it  is  only  necessary  to  suggest  some  of  the  more 
important  fields  in  which  the  boards  would  operate,  and  to 
bring  forward  typical  instances  of  their  functioning. 

5.     The  Resources  and  Raw  Materials  Board 

The  survival  of  a  modern  industrial  centre  like  the  Man- 
chester District  of  England  or  the  Lille-Roubaix  district  of 
France  depends  upon  the  supplies  of  raw  material  which  it  is 
able  to  secure  from  and  through  other  industrial  groups. 
These  supplies  are  in  turn  dependent  upon  the  available 
deposits  of  raw  materials,  the  power,  and  the  fertility  of  the 
soil.  Raw  materials  and  resources  are  thus  the  foundation 
upon  which  all  productive  enterprise  is  based,  and  it  would 
be  one  of  the  first  duties  of  a  producers'  society  to  handle 
this  issue  successfully. 

Some  idea  of  the  extent  to  which  a  modern  industrial 
community  is  dependent  for  its  survival  upon  imported  raw 
materials  may  be  gained  from  an  examination  of  the  trade 
figures  for  Great  Britain.  In  1920  the  total  value  of  British 
imports  was  1,936  millions  of  pounds  sterling.  Of  this  amount, 
767  millions  (more  than  a  third)  were  for  food,  drink  and 
tobacco,  while  another  third  (711  millions)  were  for  raw 
materials.  Under  these  two  general  headings  were  included 
such  items  as  grain  and  flour  232  millions,  meat  142  millions, 
cot  ton  and  cotton  waste  257  millions  and  wool  and  wool  rags 
94  millions  of  pounds  sterling.  The  two  main  items  of  food 
and  raw  materials,  covered  more  than  throe  quarters  of  all 
British  imports.  ("Statesman's  Year  Book.) 

But  Britain  is  a  relatively  small  and  v>ry  much  isolated 
community,  lacking  some  of  the  essential  resources.  It  is 
therefore  quite  natural  that  her  trade  figures  should  show  such 
a  result.  The  same  thing  is  of  course  true  of  Japan,  Germany, 
Holland,  Belgium,  Italy,  France,  and  in  fact  most  of  the 
important  industrial  countries.  This  is  taken  as  a  matter  of 


WORLD  ADMINISTRATION  125 

course.  Oddly  enough,  however,  it  is  likewise  true  of  the 
United  States,  which  is  as  near  to  industrial  self-sufficiency 
as  any  of  the  leading  industrial  nations. 

Among  the  5,278  millions  of  dollars  worth  of  commodities 
imported  by  the  United  States  in  1920,  there  were  40  million 
pounds  of  aluminum,  143  million  pounds  of  rice,  345  million 
pounds  of  cocoa  and  cacao,  1,297  million  pounds  of  coffee.  510 
million  pounds  of  hides,  152  million  pounds  of  fresh  meat, 
603  million  pounds  of  India  rubber,  260  million  pounds  of 
wool,  510  million  pounds  of  paper  stock,  1,460  million  pounds 
of  paper,  8,074  million  pounds  of  sugar,  4.459  million  gallons 
of  crude  oil,  130  million  skins,  and  so  on.  Here  are  extensive 
imports  of  hides,  oil,  paper,  sugar,  coffee,  wool  and  rubber — 
seven  of  the  most  important  items  of  modern  commerce. 
Well  supplied  as  it  is  with  varieties  of  climate  and  resources, 
the  United  States  is  nevertheless  compelled  to  import  large 
amounts  of  some  of  the  most  essential  raw  materials.  Like  the 
nations  of  Europe,  it  is  forced  to  depend,  for  these  and  other 
industrial  essentials,  upon  portions  of  the  economic  world  that 
lie  outside  the  national  boundaries. 

An  examination  of  these  and  similar  figures  tells  the  story 
of  the  industrial  future — a  story  of  limited,  localized  resour- 
ces upon  which  the  expanding  industries  will  be  compelled  to 
make  ever  increasing  demands.  Since  all  of  these  demands 
cannot  be  met  there  must  ensue  a  ferocious  strn<_r'_rle  among 
the  nations  to  secure  and  hold  the  resource  key  to  economic 
advantage.  The  beginnings  of  that  struQ'u'le  have  already 
been  witnessed  in  the  contest  between  France  and  Hermany 
for  the  coal  and  iron  deposits  of  Western  Europe.  TN  next 
stage  will  include  a  struggle  between  fit-eat  Britain  and  the 
United  States  for  the  possession  of  the  world's  reserves  of 
oil.  Such  a  struggle,  with  its  appalling  loll  of  suffering  and 
chaos  can  be  obviated  in  only  one  way.  by  an  apportionment. 
among  the  risers,  of  the  chief  raw  materials,  through  an  agency 
in  whose  direction  all  of  those  concerned  have  a  share.  This 


126  THE  NEXT  STEP 

result  could  be  accomplished  by  the  resources  and  raw  mater- 
ials board  of  the  world  producers'  federation. 

The  activities  of  the  resources  and  raw  materials  board 
will  include : 

1.  A  survey  of  all  available  resources  and  raw  materials. 

2.  A   survey   of   the   present   consumption   of   these   raw 
materials. 

3.  A  survey  of  the  present  production  and  of  the  possible 
production  of  these  materials. 

4.  A  production  budget,  assigning  to  each  of  the  producing 
areas  the  amounts  of  materials  that  they  are  responsible 
for  producing. 

5.  A  consumption  budget,  assigning  to  the  various  using 
areas  their  quotas  of  the  materials  produced. 

6.  Provision  for  the  increase  in  production  necessary  to 
meet  the  demands  of  the  consumers  of  raw  materials. 

7.  Final  decisions  as  to  which  resources  should  be  used, 
and  for  what  purposes. 

This  board  would  have  under  its  immediate  control  the 
destiny  of  the  whole  producing  world.  It  would  not  own  the 
resources  any  more  than  the  postal  department  of  a  govern- 
ment owns  the  post  offices  and  the  mail  trucks,  but  in  one  case, 
as  in  the  other,  the  power  to  decide  on  the  service  to  be  ren- 
dered would  rest  with  the  administrative  officers. 

The  need  for  some  central  control  over  the  world's 
resources,  and  of  some  clearing  house  for  raw  materials  seems 
quit!'  obvious.  The  world  producers'  federation  faces  no  more 
important  or  pressing  issue.  In  this  field  alone,  through  its 
el  ins iuation  of  sources  of  conflict  and  its  regularizing  of  raw 
maiorhd  supplies,  the  world  producers'  federation  could 
undoubtedly  justify  its  existence. 


diction  over  all  of  those  activities  involvino;  the  transfer  of 


AY  OKL  D  A  DM  I X  J  S  T  i  t  ATIO  X  1 27 

goods,  of  people  and  of  messages,  not  wholly  within  one  divi- 
sion. Such  a  plan  has  been  worked  out  in  part  in  the  I'nitfd 
States  of  America,  where  commerce  between  the  states  (inter- 
state commerce)  is  under  the  control  of  the  Federal  Govern- 
ment, while  commerce  wholly  within  one  state  is  under  the 
control  of  that  state.  The  same  principle,  applied  to  a  pro- 
ducers' society,  would  leave  local  transport  in  local  hands. 
while  all  matters  concerning  world  transport  would  be  under 
the  control  of  the  world  producers'  federation. 

The  present  economic  system  depends  on  the  shipment  of 
goods  from  one  point  to  another.  Raw  materials  are  sent 
from  the  place  of  their  origin  to  the  fabricating  establish- 
ment that  consumes  them.  In  some  cases,  these  distances  are 
small,  but  when  Cuba  sends  iron  ore  to  the  United  Slates,  or 
when  Brazil  ships  coffee  to  Europe,  or  when  Enu'land  sends 
coal  to  Italy,  the  distances  are  considerable  and  the  means 
of  efficient  transport  are  correspondingly  important.  The 
same  thing  holds  true  of  the  marketing  of  finished  products. 
Many  of  the  goods  turned  out  by  the  present-day  industry— 
particularly  machinery — are  very  bulky  and  heavy.  Kach  of 
the  manufacturing  nations  sells  its  goods,  not  only  within  its 
own  borders,  but  at  the  ends  of  the  earth.  The  transport  of 
goods  thus  becomes  supremely  important. 

The  transport  of  goods  and  of  people  is  only  one  aspect  of 
the  work  coming  under  the  direction  of  the  transport  and 
communication  board.  Tn  addition,  then-  would  be; 

1.  The  postal  system,  which  is  already  on  a  world  basis. 

2.  The  express  system,  which   is  really  only  a   branch  of 
the  postal  system,  and  which  is  also  on  a  world  ha 

at  the  present  time. 

3.  Telephone,  telegraph  and  wireless  machinery,  wh'u-h  arc 
in  their  very  nature  wider  than  the  boundaries  of  one 
nation,  and  which  are  to-day  amoncf  the  chief  means  of 
hold  in  2:  the  people  of  the  world  close  together. 

The  mechanism  of  transport  constitutes  a  vast  network  nf 


128  THE  NEXT  STEP 

inter-relations  that  have  been  carried  farther  toward  a  world 
basis  than  any  other  phase  of  the  world's  economic  life.  The 
nature  of  ocean  transport,  of  the  postal  service,  of  the  express 
service  and  of  the  telephone  and  telegraph  made  this  inevita- 
ble. The  inventions  and  discoveries  of  the  past  century  have 
worldized  transport  without  the  necessity  of  any  intervention 
from  a  producer's  society. 

While  the  work  of  the  transport  and  communication  board 
would  be  of  vital  consequence,  it  would  be  relatively  simple, 
in  that  it  would  involve  little  innovation,  but  rather  the  unifi- 
cation and  co-ordination  of  existing  agencies. 

7.     The  Exchange,  Credit  and  Investment  Board 

Many  economic  writers  have  characterized  the  processes 
of  exchange  as  "non-productive"  activities,  nevertheless, 
under  the  present  economic  order  they  lie  closer  to  the  seat 
of  power  than  any  other  single  group  of  activities.  The  rise 
of  the  banker  to  his  present  commanding  position  is  due,  pri- 
marily, to  his  control  over  money,  and  to  his  power  to  issue 
or  to  with-hold  credit.  A  producers'  society  may  lay  far  less 
emphasis  on  money  and  its  derivatives  than  does  the  present- 
system,  yet  the  money  function  will  remain  and  the  money 
forces  will  doubtless  play  some  part  for  a  very  long  period  in 
the  new  economic  order. 

Money  will  own  its  position  of  importance,  under  a  pro- 
ducers' society,  to  1he  need  for  a  medium  of  exchange,  and 
until  men  discover  a  means  more  effective  than  money  for  the 
facilitating  of  exchange,  money  vrill  continue  to  play  an  eco- 
nomic r^le. 

The  inhabitant  of  a  modern  industrial  community  buys 
many  things  each  day.  For  (lie  newspaper  he  spends  a  penny 
or  t\vo;  for  the  street-car  ride,  five  or  ten  cents;  for  fruit, 
groceries,  and  o<her  food  products,  a  number  of  small  sums. 
These  transactions.  In  a  country  of  fifty  millions  of  people, 
aggregate  tens  of  millions  for  each  dav. 


WORLD  ADMINISTRATION  12f) 

There  are  three  possible  ways  in  which  such  transactions 
may  be  carried  on:  (1)  each  party  may  give  the  other  some 
commodity  or  service — a  bunch  of  carrots  for  a  street-car 
ride,  a  sack  of  flour  for  a  hat.  (2)  Money  may  be  employed. 
(3)  A  system  of  bookkeeping  may  be  devised,  and  each  pur- 
chaser may  use  a  credit  card,  or  some  similar  device.  Barter 
is  impossible.  Money  is  the  usual  means  of  facilitating 
exchange.  Bookkeeping,  on  a  scale  requisite  for  all  petty 
transactions  would  be  an  immensely  intricate  mechanism. 

The  chances  are  that  at  the  outset,  a  producers'  society  will 
be  compelled  to  follow  the  practices  of  present-day  economic 
life,  and  to  distinguish  between  the  two  chief  uses  of  money: 
money  as  a  means  of  making  change  and  money  as  a  basis  for 
credit. 

This  distinction  has  been  pretty  well  established  in  all 
parts  of  the  world.  The  business  man  buys  his  morning  paper 
and  his  lunch  with  the  change  that  he  carries  in  his  pocket. 
He  buys  his  automobile  or  his  factory  buildinir  with  a  check 
(credit).  Money  as  a  means  of  making  change  will  continue 
under  a  producers'  society  until  some  more  satisfactory  means 
of  handling  minor  transactions  is  discovered.  Money  as  a 
basis  for  credit  will  be  superseded  by  a  sysiem  of  social  book- 
keeping. 

The  money  used  at  the  present  time  i^  ha^ed  on  an  amount 
of  some  commodity,  such  as  gold.     .A  producers 
undoubtedly  substitute  for  this  commodity  base 
productive  effort — an  hour's  lalior  or  a  day's  labor 
industry.     Such  an  ideali/ed  labor  production  perio 
used  as  a  basis  for  all  value  computations. 

There   are   a    number   of   requirements    for 
measure: — (1}  Tt  must  be  reasonably  stable; 
generally    recognized    and    accepted: 
medium  in  which  all  values  in  all  parN  of  the  ec 
are  calculated. 

With  a  standardized  labor  unit  of  value  once  determined. 


130  THE  NEXT  STEP 

there  would  be  several  methods  of  procedure.  One  would  be 
to  issue  a  certificate  for  each  unit  of  labor  performed.  The 
pay-check  would  then  serve  as  money.  Another  method  would 
be  for  the  world  parliament  to  issue  metal  and  paper  money, 
using  the  labor  unit  instead  of  gold  as  the  basis  of  value.  In. 
the  former  case,  there  would  be  a  labor  check,  or  piece  of 
money  in  the  community  for  each  unit  of  labor  performed. 
In  the  latter  case,  only  so  much  money  would  be  issued  as  was 
required  for  the  ordinary  purposes  of  making  change.  The 
latter  method  is  the  one  now  in  use.  The  former  would  rep- 
resent a  distinct  step  in  advance,  in  that  there  would  be  a 
certificate  of  purchasing  power  in  the  community  for  each 
unit  of  goods  and  services  that  was  produced.  There  would 
be  still  a  third  method  of  handling  the  problem,  by  having 
the  world  producers'  federation  issue  paper  currency  stamped 
with  the  statement  "this  is  a  mark"  or  "this  is  a  franc,"  and 
making  it  receivable  for  all  legal  and  public  obligations.  If 
the  amount  of  this  "fiat"  money  were  carefully  regulated,  it 
would  probably  serve  all  of  the  purposes  for  which  money  is 
needed.  Whatever  its  character,  it  is  essential  that  all  money 
and  credit  should  be  publicly  issued  and  under  public 
control. 

The  first  problem  confronting  the  exchange  and  credit 
hoard  would  be  to  establish  some  such  generally  acceptable 
standard  of  value.  The  chaos  now  existing  in  exchange  rates 
is  but,  a  foretaste  of  the  difficulties  that  confront  a  world 
which  is  attempting  to  carry  on  economic  transactions  with 
scores  of  different  moneys  and  of  differing  financial  systems. 

The  exchange  and  credit  board  would  have  three  other 
important  fields  of  activity: 

1.  The  computation  of  the  values  produced  by  the  various 

industrial  groups. 

This  result  would  be  accomplished  by  establishing  a  clearing 
house  for  reports  on  production  in  all  industries  and  in  all 
parts  of  the  world. 


WORLD  ADMINISTRATION  1:51 

2.  The  financing;  or  exchange  of  materials  between  the 
various  producing  groups. 

This  activity  is  now  carried  011  by  the  commercial  banker,  who 
handles  trade  acceptances,  bills  of  exchange,  and  the  like.  It 
need  be  no  more  than  a  system  of  book-keeping,  with  the 
balances  entered  as  loans  from  the  industries  that  produce  u 
surplus  to  those  that  are  using  more  than  they  produce. 
Such  a  situation  would  of  necessity  be  temporary,  since  the 
aim  of  the  central  authority  would  be  to  balance  values  in 
such  a  way  that  there  would  be  an  equilibrium  all  around, 
with  no  surpluses  and  no  deficits.  Such  an  ideal  condition 
would  never  be  reached,  but  it  could  be  approximated. 

3.  Transfers  of  capital,  or  loans  negotiated  between  vari- 
ous  industrial   groups,    and    covering    more   than    one 
division. 

These  loans  would  take  the  form  of  adverse  balances  in  the 
general  clearing  between  producing  groups,  and  would  cover 
the  advances  for  improvements  and  betterments,  that  one 
producing  group  would  make  to  another,  or  that  the  world 
producers'  federation  would  make  to  one  of  the  producing 
groups. 

The  exchange  and  credit  board  would,  in  reality,  be  tli^ 
book-keeping  department  for  the  world  producers'  federation, 
whose  exchange  transactions  would  be  planned  and  handled 
through  this  department. 

8.     The  Bii'lf/rf  P,nard 

Two  principal  functions  would  be  performed  by  the  Imdiref. 
board.     On  the  one  hand  it  would  be  char-red  with  Imdi: 
or  planning  the  transactions  involved  in  the  world  organiza- 
tion of  economic  life.     This  function  would  include  the  est 
mates   of   the   requirements   of   the    major    economic    gi 
during  a  given  year,  and  the  estimate  of  the  sources 
which  these  requirements  were  to  be  met.    On  the  oilier  hand. 
it  would  be  responsible  for  preparing  the  budget  of  the  worlc 


132  THE  NEXT  STEP 

producers'  federation,  and  of  deciding  upon  the  course  that 
must  be  adopted  in  order  to  meet  these  necessary  outlays. 
Thus  the  board  would  correspond,  in  a  sense,  to  the  finance 
committee  of  a  modern  parliament  or  to  the  department  of 
finance  in  a  modern  cabinet. 

9.     The  Adjudication  of  Disputes  Board 

The  organization  of  the  world  producers'  federation 
places  before  it  certain  judicial  functions.  The  federation 
would  be  called  upon  to  adjudicate: 

1.  Disputes  between  any  of  the  industrial  groups  involving 
more  than  one  division. 

2.  Disputes  between  one  of  these  industrial  groups  and  the 
world  producers'  federation. 

3.  Disputes  between  various  departments  of  the  world  pro- 
ducers' federation  and  its  subdivisions. 

These  functions  would  devolve  upon  the  adjudication  of 
disputes  board,  which  would  constitute  a  court  or  committee 
of  review,  charged  with  the  duty  of  hearing  issues  in  dispute 
before  they  went  to  the  board  of  managers,  the  executive 
committee  and  the  world  parliament  for  final  decision.  The 
adjudication  of  disputes  board  would  not  be,  in  any  sense, 
a  court  of  last  resort.  Rather  it  would  be  a  court  of  original 
jurisdiction,  siding  out  the  issues  as  they  arose,  and  present- 
ing its  findings  to  a  higher  body.  Most  of  its  decisions  would, 
as  a  matter  of  routine,  lie  final,  but  on  any  issue  of  importance, 
1he  right:  of  final  decision  would  rest  in  the  world  parliament, 
unless  that  right  were  assumed  by  the  people  through  a 
dissolution  of  the  parliament. 

The  present  governmental  system,  with  its  checks  and  bal- 
ances— legislative,  executive  and  judiciary — has  proved  far 
from  satisfactory,  since  it  results  either  in  a  deadlock  between 
the  various  authorities,  or  else  some  one  of  them,  as  for  ex- 
ample, the  courts  in  the  United  States,  assume  the  final 


WORLD  ADMINISTRATION  ]:}.'j 

authority.     In  neither  ease  is  it  possible  for  the  average  man 
to  get  to  the  bottom  of  the  difficulty. 

With  all  the  functions  of  government  centering  in  the 
world  parliament,  there  would  be  less  chance  of  friction  be- 
tween the  various  parts  of  the  governmental  machinery,  and 
a  greater  likelihood  of  effective  co-operation  between  the  vari- 
ous departments  of  the  government.  Above  all,  the  citizen 
would  know  where  to  look  for  action  and  where  to  place 
the  responsibility  for  failure  to  act. 

10.     The  Detail  of  World  Administration 

There  is  something  of  the  grotesque  in  discussing  the 
problems  that  would  come  for  solution  before  a  world  pro- 
ducers' federation.  The  organization  in  question  docs  not 
exist.  How  impossible,  then,  to  predict  what  it  will  do  when 
it  comes  into  being.  Still,  the  effectiveness  of  any  proposal 
must  be  determined  by  its  results  in  the  realm  of  those  routine 
affairs  with  which  the  organization  will  be  called  upon  to 
deal.  A  world  producers'  federation  will  be  constituted  for 
the  purpose  of  handling  certain  world  economic  problems. 
and  the  means  by  which  this  control  will  be  exercised  is  a 
matter  of  the  first  importance. 

The  plan  for  world  administration,  as  here  outlined,  is 
based  on  two  general  ideas.  The  first  is  that  certain  problems 
of  world  importance  would  conic  before  the  world  parliament 
for  solution;  the  second  is  that  in  dealing  with  any  problems 
of  administration,  local  autonomy  should  be  preserved,  the 
function  of  each  administrative  group  should  be  dearly 
defined,  and  the  control  of  the  central  authority  should  be 
exerted  primarily  for  the  purpose  of  approving  or  of  dis- 
approving the  actions  of  the  administrative  divisions,  leaving 
with  them  the  task  of  initiating  and  carrying  out  the  plans 
involved  in  the  work  of  their  respective  divisions.  With 
these  simple  principles  of  administration  in  mind,  it  is  easy 
to  plan  almost  any  kind  of  administrative  organization. 


134  THE  NEXT  STEP 

The  real  test  will  come  when  an  issue  is  raised  over  the 
status  of  a  given  problem.  When  has  the  question  of  resource 
distribution  ceased  to  be  a  local  matter  and  become  a  world 
matter  ?  "When  has  the  problem  of  credit  become  a  world 
problem?  To  such  questions  there  is  but  one  answer:  when 
these  matters  are  of  vital  concern  to  more  than  one  division 
or  to  more  than  one  of  the  major  industrial  groups — in  other 
words,  when  they  pass  beyond  the  control  of  one  group,  they 
are  matters  for  world  jurisdiction. 

Xo  plan  can  be  drafted  that  will  anticipate  the  difficulties 
of  world  economic  organization.  The  utmost  that  men  can 
hope  to  do  is  to  draft  a  set  of  working  rules  that  will  enable 
them  to  act  wisely  when  confronted  by  difficulties. 

The  world  is  still  in  a  state  of  chaos.  There  are  many 
local  authorities,  but  no  central  authority.  There  are  plans 
and  policies,  looking  to  the  relief  of  the  more  pressing 
economic  and  social  difficulties,  but  all  of  them  are  conditioned 
upon  the  establishment  of  some  world  power  that  shall  prove 
competent  to  handlle  world  affairs.  Out  of  this  chaos  there 
must  emerge,  first,  clear  thinking  as  to  the  next  .steps  that  are 
to  be  taken  in  the  reorganization  of  the  world :  second,  a 
willingness  to  make  the  concessions  necessary  to  this  reorgani- 
zation, and  third  a  conscious  purpose  to  build  a  better  living 
place  for  human  societv. 


VII.     TRIAL  AND  ERROR  IX  ECONOMIC 
ORGANIZATION 

1.     Tryiny  Thinys  Out 

A  SOCIETY,  like  the  individuals  of  which  it  is  composed, 
learns  first  by  trial  and  error.  The  earliest  lessons  that  the 
human  race  received  were  obtained  by  this  method,  and  all 
new  information  is  thus  secured.  The  numerous  economic 
difficulties  that  lie  ahead  of  the  present  generation  must  be 
met  and  solved  by  the  method  of  trial  and  error,  or,  as  it  is 
sometimes  called  in  political  jargon,  "muddling  through." 

During  historic  times  men  have  spent  vast  stores  of  energy 
in  trying  things  out.  It  has  frequently  been  observed  that 
man  is  a  social  animal.  It  might  be  said  with  equal  truth 
that  he  is  an  experimenting  animal.  lie  is  curious,  he  is 
venturesome,  he  enjoys  change,  he  relishes  novelty,  lie  is 
eager  to  better  his  condition.  Animals  live  on  from  generation 
to  generation,  building  nesls  after  the  same  pattern  and 
migrating  over  the  same  territories.  Bui  man  investigates, 
ponders,  experiments,  improves. 

This  principle  of  experiment — the  appeal  to  trial  and 
error — holds  true  of  social  as  well  as  of  individual  life.  The 
hunter  tries  out  a  new  snare  or  weapon,  ihe  machinist  con- 
structs a  new  tool,  the  chemist  works  out  a  new  formula.  Ihe 
architect  creates  a  neAv  variety  of  arch  or  buttress,  the  edu- 
cator writes  a  new  kind  of  text-book,  the  sanitary  engineer 
devises  new  methods  for  securi;v_;'  and  safeguarding  a  water 
supply,  the  statesman  plans  a  new  system  of  roads  that  will 
open  up  the  rural  districts,  the  social  scientist  draws  Ihe 
design  for  a  new  type  of  economic  organization.  From  the 
most  personal  to  the  most  social,  from  the  most  local  to  the 

13'" 


136  THE  NEXT  STEP 

most  general  or  universal,  human  activities  are  directed  over 
new  fields  and  into  new  channels  on  the  principle  of  experi- 
ment, by  the  method  of  trial  and  error. 

The  scientist  or  inventor  works  in  his  laboratory  or  in 
his  shop,  devoting  his  energies  to  investigation  and  research 
which  are  nothing  more  than  the  application  of  the  principle 
of  trial  and  error  to  the  particular  problems  with  which  his 
science  is  confronted.  Once  the  experimenter  has  discovered 
a  way  to  compel  mechanical  power  to  toil  for  man,  or  to 
destroy  the  typhoid  germ,  or  to  talk  across  a  continent  without 
wires,  the  next  task  is  to  find  a  better  way  or  an  easier  way. 
Far  from  decreasing  the  necessity  for  experiment,  each  new 
discovery  in  the  realm  of  natural  science  opens  the  door  to 
additional  possibilities.  To-day  every  important  college,  most 
cities,  many  industries,  and  public  institutions  maintain 
experimental  laboratories  in  the  various  fields  of  applied 
knowledge,  and  employ  highly  trained  experts  whose  sole 
duty  it  is  to  try  things  out. 

Inventors  frequently  hit  upon  new  ideas  or  upon  novel 
devices  by  chance,  but  for  every  such  chance  discovery,  there 
are  scores  and  probably  hundreds  of  ideas  and  devices  that 
have  been  carefully  thought  out,  worked  over,  rejected, 
revised,  modified,  until  they  produced  the  desired  results. 
There  is  a  margin  of  chance  in  all  experiment,  but  surrounding 
it  there  is  a  vast  field  of  careful  thinking  and  planning  and 
of  endless  purposeful  endeavor. 

These  observations  are  commonplaces  in  the  laboratory 
and  in  the  department  of  research.  They  have  filtered  through 
to  thinking  people  who  begin  to  understand  the  part  that 
experiment  plays  in  all  forms  of  scientific  progress.  There 
is  a  general  agreement,  that  if  there  is  to  be  an  increase  in 
the  knowledge  that  men  possess  regarding  the  mechanical 
forces,  the  only  sure  way  of  gaining  this  knowledge  is  to 
weijrh,  measure,  describe  and  classify.  This  applies  to  solids, 
liquids,  gases,  rocks,  plants,  animals,  and  even  to  the  structure 


ECONOMIC  ORGANIZATION  137 

and  function  of  the  human  body.  But  when  it  comes  to 
social  institutions,  even  the  wisest  hesitate  and  question.  Is 
it  possible  that  social  knowledge  can  be  gained  only  in  this 
way? 

There  is  no  other  way!  Like  the  individuals  of  which 
it  is  composed,  society  must  investigate,  experiment,  and 
learn  throught  trial  and  error.  Indeed,  that  is  the  tacitly 
accepted  method  by  which  social  knowledge  is  accumulated. 
History  is  a  record  of  social  experiments — not  so  consciously 
clirectcd  nor  so  carefully  planned  as  the  experiments  that  are 
taking  place  in  the  chemical  laboratory,  hut  experiments  none 
the  less.  What  other  explanation  can  account  for  the  many 
forms  of  family  relationship,  the  many  varieties  of  religious 
organizations,  the  numerous  types  of  political  institutions,  the 
multitude  of  educational  institutions.  "Educational  experi- 
ments" are  the  commonplaces  of  the  pedagog.  Slavery  was 
one  of  society's  economic  experiments,  feudalism  was  another, 
capitalism  is  a  third.  Through  successive  generations  these 
institutions  have  been  built  up.  reformed,  discarded  and  re- 
placed. The  history  of  social  institutions  is  a  history  of  social 
experiment — -of  community  progress  through  trial  and  error. 

Obstacles  are  thrown  in  the  way  of  the  social  experimenter. 
Vested  interests  seek  to  convince  the  credulous  and  the 
ignorant  that  whatever  is,  is  right.  The  jobs  of  office  holders, 
the  possessions  of  property  owners,  the  security  of  rulinir 
classes,  depend  upon  their  ability  to  sit  on  the  lid  of  social 
experiment.  "Do  not  touch,  do  not  think,  do  not  question!1 
is  the  warning  of  masters  to  their  social  vassals.  Those  who 
eat  of  the  apple  of  experiment  acquire  the  knowledge  of  c-ood 
and  evil,  and  with  this  knowledge  comes  the  desire  to  reject 
and  destroy  the  evil  while  they  hold  fast  and  nmrment  the 
good. 

Those  who  have  learned,  arid  who  have  dared  tn  protest. 
have  been  ridiculed,  persecuted,  outlawed.  Sometimes  th--ir 
bones  have  bleached  on  the  o-ihhet  or  rotted  in  duntreons. 


138  THE  NEXT  STEP 

Still,  the  jail,  the  gallows  and  the  lynching-bee  have  not  kept 
experimenters  quiet  in  the  past,  and  they  will  probably  not 
do  so  in  the  future. 

During  recent  times — particularly  in  the  last  fifty  years — 
the  changes  in  economic  and  social  life  have  been  so  rapid 
that  the  "always  was  and  always  will  be"  protest  is  having 
a  harder  and  harder  time  to  make  itself  heard  above  the 
clatter  of  the  social  house-wreckers,  and  the  rap  and  beat  of 
the  social  construction  engineers. 

2.     The  Capitalist  Experiment 

The  present  economic  society  is  an  experiment — less  than 
a  century  old  in  most  parts  of  the  world.  It  has  evolved 
rapidly  through  a  series  of  forms,  corresponding  with  the 
rapid  advances  in  the  methods  by  which  men  wrested  a 
living  from  nature. 

The  masses  of  the  people  in  industrial  countries  have 
abandoned  their  farms,  their  villages  and  their  rural  life, 
have  moved  into  the  cities,  and  have  gone  to  work  in  the 
mines,  factories,  mills,  stores  and  offices,  very  much  as  the 
mechanics  and  farmers  dropped  their  accustomed  tools  and 
rushed  to  the  gold  fields  of  California  and  Australia.  "Within 
two  or  three  generations  the  whole  basis  of  life  has  been 
shifted  and  a  new  order  has  been  established.  This  change 
has  been  made  for  the  purpose  of  securing  a  better  living. 

The  people  in  the  industrial  countries  have  accepted 
capitalism  as  an  essentially  desirable  means  of  gaining  a 
livelihood.  The  new  order  has  given,  them  an  opportunity 
for  mass  living  that  has  been  reserved  in  the  past  for  a  small 
percentage  of  the  people.  It  has  provided  an  immense  number 
of  tilings,  for  the  most  part  inconsequential  and  tawdry,  but 
things  nevertheless  which  would  appeal  to  the  possessive 
instincts  of  those  who  had  never  enjoyed  many  possessions. 

The  new  order  has  made  each  family  in  an  industrial 
district  doubly  dependent — dependent  on  a  job  which  it  can 


ECONOMIC  ORGANIZATION  130 

in  no  wise  control,  and  dependent  on  the  economic  mechanism 
for  the  supply  of  goods  and  services  without  which  mass  city 
life  is  quite  impossible.  The  rural  family  had  a  supple- 
mentary source  of  living  in  its  chickens,  pigs,  cows,  goats. 
bees  and  garden.  Fuel  was  cheap  and  nature  provided 
berries,  nuts  and  game.  Life  was  rough,  but  the  means  of 
maintaining  it  were  relatively  abundant.  City  life  has  cut 
away  almost  all  of  these  forms  of  supplementary  income, 
at  the  same  time  that  it  has  imposed  upon  the  family  the 
need  to  pay  for  practically  all  goods  and  services.  The  city 
breadwinner  must  get  and  hold  a  job,  if  his  family  is  to  live. 

Mass  life  in  cities,  mass  work  in  factories,  job-dependence 
—  all  of  these  experiments  are  being  made  in  a  field  that  up 
to  the  present  time  has  been  virtually  untouched  by  the 
human  race.  Mankind  has  gone  into  these  experiments  hope- 
fully, trustingly,  blindly,  without  any  guarantee  of  their 
workability. 

A  casual  examination  of  the  premises  on  which  the  capi- 
talist experiment  is  built  will  show  the  extremely  precarious 
position  in  which  the  people  who  are  dependent  up<m  it  now 
find  themselves. 

The  capitalist  experiment  is  built  on  the  assumption  that 
competition  rather  than  co-operation  is  (he  effective  means 


each  man  is  to  forage  for  himself.     This  individual  activity 
was    relied    upon    to    promote    initiative    and    to    slimulat-1 
ambition.     In  practice,  capitalist  society  has  been  compel 
to  abandon  competition  in  many  of  its  aspect-      Monopoly 
the  opposite  of  competition,  yet  the  modern  capitalist   world 
is  full  of  monopoly  because  monopoly  pays  better  than  compe- 
tition —  it  is  a  more  workable  economic  scheme. 

Following  out  the  assumption  that  competition  is  tl:> 
of  economic  society,  one  arrives  at  a  necessary  corollary  to 
the  ircneral  theory.     The  purpose  of  competition  is  to  injure, 
wipe    out    and    dispose    of    the    competitor.     Therefore    the 


140  THE  NEXT  STEP 

misfortune  of  our  competitors  is  our  good  fortune.  This 
would  lead,  as  applied  to  the  actual  conditions  of  life,  to 
some  such  formula  as : 

1.  Bankrupt  your  competitor  and  you  will  profit. 

2.  Impoverish  your  neighbor  and  you  will  benefit. 

3.  Injure  your  fellow-man  and  you  will  gain. 

Stated  thus  baldly  and  harshly,  these  three  propositions 
sound  incredibly  silly,  particularly  in  view  of  the  example 
the  world  has  just  had  of  large  scale  competition — the  World 
"War — yet  they  are  a  fair  picture  of  the  line  of  thought  and 
conduct  accepted  as  rational  by  modern  economic  society. 
The  normal  processes  of  competition  are  directed  to  the 
destruction  of  competitors.  War  is  a  frankly  avowed  means 
of  smashing  rivals.  Nationalism  is  built  on  the  theory  that 
"our"  nation  is  superior  to  all  other  nations,  and  that,  in 
the  long  run,  it  is  capable  of  defeating  (injuring)  them. 

The  practice  of  such  ideas  render  an  effective  organization 
of  society  virtually  impossible,  and  it  renders  social  catas- 
trophe almost  inevitable.  Bankruptcy  breeds  bankruptcy. 
Impoverishment  is  a  contagious  economic  plague.  Injury 
leads  to  bitterness,  hatred  and  further  injury.  These  logical 
fruits  of  competition  once  admitted  into  the  economic  body, 
threaten  its  very  life. 

The  tenets  upon  which  capitalism  is  founded  have  already 
boon  abandoned  in  part  by  their  sponsors  as  unworkable. 
But  at  best  they  represent  a  standard  of  social  morality  that 
is  essentially  destructive  of  social  well-being. 

The  human  race  has  no  guarantee  of  the  success  of  any 
experiment,  and  recent  experiences  with  the  war.  and  with  the 
present  post-war  plight  of  Europe  suggest  that  the  capitalist 
experiment  will  fail  disastrously  unless  some  extraordinarily 
successful  efforts  are  made  to  put  things  to  rights. 

Society  experiments,  trying  first  one  means  of  advance- 
ment and  then  another.  A  certain  number  of  these  new 
ventures,  which  prove  to  be  of  social  advantage,  are  adopted 


ECONOMIC  ORGANIZATION  141 

and  incorporated  into  the  social  .structure.  The  vast  majority 
are  rejected  as  inadequate  to  meet  the  social  need.  Capitalism 
is  apparently  in  this  latter  class. 

3.     The  (1o*t  of  Experience 

Experiment  is  the  necessary  road  to  new  experience,  and 
the  cost  of  experiment  is  written  in  the  immense  wastes  that 
it  involves.  Experience  gained  through,  experiment  is  some- 
times very  costly.  It  is  never  cheap. 

Frequently  these  costs,  measured  in  terms  of  misery,  are 
so  great  as  to  overbalance  the  advantages  gained  through  the 
experiment.  If,  therefore,  there  were  another  way  to  gain 
knowledge  except  through  the  processes  of  experiment,  it 
•would  result  in  an  immense  saving  for  mankind. 

4.     Eihtcaiion 

There  is  a  way,  other  than  experiment,  in  which  knowledge 
may   be  gained.     Instead  of   relying  on   experimeni 
experience)   for  the  spreading  of  knowle,!^1",  it   is  possible  1<> 
utilize  the  indirect  channel  called  education.     If  this  method 
is    followed,    and    the    results    of    the    race    experi: 
experience  arc  made  available  to  the  yornm1  of 
the  need  for  exp"rinient  will   be  limited   to 
since  most  of  the  necessary  know]  'dge  wsl 
through  education. 

The  individual  need  jmt  repeat  all  "I'  the  »•.:>• 
his    ancestors    with    animal    breeding,    hai 
smelting,  writing,  house-build  in <r.  etc.     (^"- 
and  crafts  were  built  HP — f^ach  g< 
to  the  total  of  knowledge.     Tl  •  -<•  ivsi 
which  were  first  passed  from  hand  to  : 
to  mouth,    and   finally   written    down,    ard 
handed  from  generation  to  generation 
of   education,    are   amonir   the   most    imp 
assets. 


142  THE  NEXT  STEP 

The  farther  the  race  goes  in  its  accumulation  of  knowledge, 
the  more  important  does  education  become,  since  there  is  more 
to  transmit  from  one  generation  to  the  next.  Among  primitive 
people,  the  educational  process  is  completed  at  a  very  early 
age.  V>'il!i  the  emergence  of  arts  and  crafts,  the  apprentice- 
ship to  life  becomes  longer.  At  the  present  time,  the  individual 
may  e<  ntinue  his  education  as  long  as  he  is  capable  of 
acquiring  new  ideas.  Under  the  present  society,  therefore, 
Hi-1  -  /,  ;:cutiop.al  processes  are  the  chief  reliance  for  the  trans- 
i  T  .;!on  of  new  ideas. 

5.     Facing  the  Future 

The  accumulated  knowledge  of  the  ages,  handed  on  from 
one  generation  to  the  next,  enables  the  scientist  to  suggest  the 
direct  ion  in  which  new  experiments  should  be  made  as  well  as 
to  predict  their  probable  outcome.  His  work  ceases  to  be 
hapha/ard.  It  has  a  well-understood  policy  and  common 
problems. 

Particularly  in  the  realm  of  natural  science,  has  there  been 
a  vast  accumulation  of  verified  knowledge,  from  which  thero 
have  been  deduced  principles  and  laws  which  enable  the 
electrician  or  the  astronomer  to  predict  the  action  of  the 
electric  current  or  the  course  of  the  stars  with  almost  unerring 
accuracy.  To  be  sure,  these  predictions  do  sometimes  go 
wrong,  but  for  the  most  part  they  are  founded  on  verified 
and  tested  hypotheses. 

Tlie  past  thus  advises  the  present,  which,  from  the  vantage 
ground  so  gained,  prepares  its  contribution  to  the  future.  If 
each  generation  were'  compelled  to  learn  how  to  build  fires, 
to  employ  language,  to  shape  pottery,  to  weave,  to  print  and 
to  harness  electricity  all  over  again,  it  would  seldom  get 
farther  than  the  rudiments  of  what  is  now  called  civilization. 

The  new  knowledge  that  is  gained  in  each  generation  is 
obtained  through  experiment,  but  many  costly  errors  are 
avoided  in  these  experiments  through  the  wisdom  that  is 
based  on  the  accumulated  knowledge  of  the  past. 


ECONOMIC  OKGAXIZATION  143 

Thus  each  generation  of  scientists  accepts  from  its  prede- 
cessors a  trust  for  the  future.  Not  only  must  it  preserve  the 
body  of  knowledge,  but  it  must  verify,  amplify  and  enrich  it. 
This  is  as  true  of  the  social  scientist  as  it  is  of  the  natural 
scientist.  The  difference  between  them  is  that  the  natural 
scientist  has  worked  out  his  technique  and  established  his  field, 
while  the  social  scientist  has  reached  only  the  threshold. 

6.    Accumulating  Social  Knowlcdyc, 

Social  knowledge  is  }~et  in  its  infancy.  It  is  only  within 
the  century  that  Comte,  Buckle,  Marx,  Spencer  and  other 
historians  and  sociologists  have  made  an  attempt  to  place  the 
accumulations  of  social  knowledge  on  a  par  with  the  accumu- 
lations of  mathematical  or  chemical  knowledge. 

Until  some  effort  was  made  to  study  society  in  a  scientific 
spirit,  there  was  no  reason  for  supposing  that  men  might  be 
able  to  cope  with  social  ills  or  to  prevent  social  disaster. 
Even  to-day,  while  there  is  no  longer  any  question  as  to  the 
possibility  of  classifying  social  facts,  and  while  sociology  is 
regarded  as  a  science  of  great  promise,  the  feeling  lingers 
that  social  events  are  fore-ordained.  M;my  people  fr,-l  to-day 
about  social  disaster  as  the  men  of  the  middle  ages  felt  about 
the  plague — that  it  is  outside  the  field  of  man's  preventive 
power.  Another  fatalistic  school  of  thought  holds  that  men 
learn  their  social  lessons  only  through  failure  and  disaster. 
According  to  the  first  line  of  thought  it  is  useless  to  interfere 
with  social  processes  because  they  are  in  the  hands  of  the 
gods;  according  to  the  second,  mm  will  not  interfere,  until 
they  have  been  whipped  into  rebellion  by  the  adverse  condi- 
tions surrounding  them. 

Men  in  the  past  have  modified  the  course  of  human  events 
in  the  most  profound  way.  The  first  smelter  of  iron  and  the 
first  constructor  of  a  wheel  heiran  a  series  of  events  thai  is 
still  molding  social  life.  It  is  quite  possible  to  say  that  these 
events  were  fore-ordained,  but  it  is  at  least  equally  possible 


144  THE  NEXT  STEP 

to  reply  that  the  same  process  of  fore-ordination  is  still  busy, 
and  that  the  changes  that  it  will  make  through  the  present 
generation  will  be  at  least  as  important  as  those  which  it  has 
made  in  the  preceding  ages. 

Those  who  believe  that  the  race  learns  only  through  hard- 
ships and  suffering  should  bear  in  mind :  first,  that  most  of 
the  knowledge  communicated  to  the  individuals  of  each  gen- 
eration is  communicated  indirectly  through  some  process  of 
education ;  second,  that  society  is  composed  of  those  individu- 
als; third,  that  modern  communities  have  built  a  vast  machine 
whose  sole  purpose  it  is  to  influence  opinion  by  teaching 
(indirectly)  in  the  school,  in  the  church,  through  the  printed 
page  and  the  film.  In  Japan  this  machine  is  employed  to 
teach  the  people  the  sanctity  of  the  emperor ;  in  Britain  it  is 
used  to  convince  the  masses  of  the  sanctity  of  business-as- 
usiial ;  in  France  it  is  used  to  proclaim  the  sanctity  of  prop- 
erty; in  Russia  it  is  used  to  inculcate  the  sanctity  of  the 
revolution.  If  people  learned  only  through  first  hand  expe- 
rience, these  propaganda  machines  would  be  failures.  In 
practice,  they  are  highly  successful. 

Social  disaster  is  not  the  only  path  to  social  knowledge. 
It  is  not  necessary  for  a  generation  to  suffer  from  typhus  or 
to  be  ruined  by  war  in  order  to  be  convinced  that  these  dread 
diseases  are  menaces.  The  desire  to  prevent  famine  is  felt  by 
millions  who  have  never  come  any  nearer  to  it  than  the  stories 
in  the  papers.  Society  learns,  indirectly,  through  education — 
slowly  of  course,  but  none  the  less  surely. 

The  average  man  is  convinced  of  the  desirability  of  trying 
to  avoid  disease,  hunger  and  the  other  ills  that  effect  him 
personally  and  immediately.  lie  is  not  yet  convinced  of  the 
efficacy  of  a  similar  attitude  toward  war,  revolution  and  other 
disasters  which  inevitably  destroy  some  portion  of  society,  and 
which  in  the  end  will  prove  as  preventable  as  disease  and 
famine.  Social  disaster  seems  more  inevitable  because  it 
strikes  more  people  at  one  time,  while  individual  disaster  lias 


ECONOMIC  ORGANIZATION  14.", 

been  more  carefully  studied,  is  better  understood  and  is  more 
localized. 

Grave  dangers  menace  present-day  society.  Economic 
breakdown,  war  and  social  dissolution  with  their  terrible 
scourges — pestilence  and  famine — have  already  overtaken 
millions.  It  is  plain  that  some  new  course  of  social  action 
must  be  planned ;  that  some  social  experiment  must  be  inaugu- 
rated that  will  ward  off  the  impending  disasters. 

Social  experiments  should  be  made,  as  chemical  and  elec- 
trical experiments  are  made,  after  all  of  the  available  facts 
have  been  carefully  considered  and  digested.  The  results  of 
such  wisely  planned  experiments  in  the  social  field  may  be 
just  as  dramatic  as  the  results  of  similarly  planned  experi- 
ments in  the  field  of  natural  science. 

Never  in  the  history  of  social  change  has  there  been  an 
intelligent  direction  of  social  processes.  Many  men  in  many 
ages  have  had  ideals  and  aspirations,  coupled,  in  some  cases, 
with  a  limited  knowledge  of  social  practice,  but  social 
changes  have  come  upon  mankind  for  the  most  part,  as  a 
meteor  comes  upon  the  earth's  atmosphere — unexpected  and 
unheralded,  startling  those  who  have  seen  it  by  the  suddenness 
of  its  appearance.  Nor  has  there  been  any  attempt  on  the 
part  of  the  ruling  powers  to  instill  a  different  point  of  view 
with  regard  to  these  matters.  On  the  contrary,  there  has 
been  a  determined  effort  to  convince  men  that  social  chancres 
were  beyond  their  ken.  The  air  of  mystery  has  been  blown 
away  from  natural  phenomena,  but  it  is  encouraged  and  per- 
mitted to  surround  social  chancres.  While  it  endures,  an 
intelligent  direction  of  social  life  K  of  course,  quite  out  of 
the  question. 

This  attitude  is  being  broken  down,  however.  The  past 
hundred  years  of  experiment  and  experience  witli  a  competi- 
tive order  have  convinced  multitudes  that  such  an  order  is 
unworkable.  During  the  same  period,  the  development  of 
economic  organization  on  ever  broader  lines  has  emphasized 
the  need  of  common  purposes  and  common  activities. 


146  THE  NEXT  STEP 

Recent  social  experience  teaches  plainly  that  an  injury  to 
one  is  an  injury  to  all;  that  a  benefit  to  one  is  a  benefit  to 
all ;  that  men  rise  in  the  scale  of  well-being  with  their  fellows 
and  not  from  them,  and  that  a  co-operative  social  life  is  the 
only  one  that  will  prove  livable  and  workable.  These  four 
propositions  include  the  best  thinking  of  the  modern  world 
on  the  fundamentals  of  a  social  structure  that  will  prove 
livable  and  workable. 

The  acceptance  of  any  such  standards  of  social  life 
involves  a  right-about-face  in  the  basic  social  philosophy  of 
the  world. 

1.  The  doctrine  of  laissez-faire  must  be  accepted  for  ivhat 
it  is — an  exploded  theory  that  has  promoted,  not  social 
well-Icing,  but  the  interests  of  favored  classes. 

2.  Catastrophe  must  be  recognised  as  the  most  costly  ave- 
nue to  progress. 

3.  Social  science  must  be  made  at  least  as  effective,  in 
guiding  the  life  of  the  ivorld  as  is  physical  science. 

Social  science  alone  will  not  protect  men  from  the  dangers 
that  surround  them.  Every  social  group  is  dependent  for  its 
effectiveness  upon  the  kind  of  individuals  of  which  it  is  com- 
posed, and  their  ideas  and  ideals  limit  the  ideas  and  ideals 
of  the  group.  At  the  same  time,  a  careful!}7  thought  out 
course  of  social  action,  like  a  carefully  thought  out  course  of 
individual  action  presents  a  standard  toward  which  society 
may  work. 

A  plan  for  social  organization  is  like  the  blue-print  with 
which  the  mechanic  works.  Science  comprises  his  rules  and 
methods  of  procedure,  but  the  driving  power  comes,  not  from 
the  lil ue-print  and  not  from  the  formulas,  but  from  the  man 
himself.  This  holds  equally  true  of  society. 

7.     Conscious  Social  Improvement 

Conscious  social  improvement  is  the  improvement  made 
by  society  in  pursuance  of  plans  that  are  prepared  and  car- 


ECONOMIC  ORGANIZATION  147 

ried  out  with  the  knowledge  and  approval  of  the  mass  of 
the  community.  It  is  the  product  of  community  intelligence 
directed  to  public  affairs. 

The  individual  can  make  conscious  improvements  in  his 
condition  only  through  observation,  analysis,  conclusion  and 
experiment.  The  community  is  under  the  same  limitations. 
Its  progress  will  be  intelligent  only  when  it  works  rationally 
and  purposefully  upon  the  problems  with  which  it  is  con- 
fronted. 

The  individual  faced  with  a  perplexing  situation  in  his 
business  or  in  his  private  life,  sits  down  and  goes  over  the 
matter,  examining  it  point  by  point,  until  he  thinks  that  he 
has  a  solution  for  his  difficulties.  Society,  under  similar  cir- 
cumstances, must  follow  a  like  course  of  action.  People  must 
ponder  and  discuss  the  issues  before  them  until  there  is  some 
consensus  of  opinion  as  to  what  course  should  be  followed. 
It  is  only  under  such  conditions  of  intelligently  directed  social 
action  that  conscious  social  improvement  is  made. 

Conscious  social  improvement  is  therefore  practicable 
when  the  available  knowledge  about  social  problems  has  been 
socialized  or  popularized  to  a  degree  that  renders  the  com- 
munity intelligent  concerning  its  own  affairs.  The  task  of 
popularizing  any  form  of  knowledge  falls  primarily  to  the 
educator,  the  journalist  and  the  other  moulders  of  public 
opinion. 

8.     The  Barriers  in  Prorjrms 

There  are  two  important  barriers  to  intelligent  social 
progress.  One  is  the  lack  of  organized  knowledge  concerning 
social  matters.  The  other  is  the  restriction  of  this  knowledge 
to  a  tiny  fraction  of  the  population. 

Social  science,  still  in  its  infancy,  has  ahead  of  it  decades 
of  advancement  before  it  attains  a  position  corresponding  with 
that  of  the  physical  sciences.  Even  at  that  its  progress  must 
be  slower,  first  because  of  the  intricate  nature  of  social 


148  THE  NEXT  STEP 

phenomena,  and  second  because  of  the  herculean  efforts  that 
the  vested  interests  make  to  destroy  any  form  of  social  experi- 
ment that  threatens  their  privileges. 

Equally  serious,  as  a  limitation  on  the  efficacy  of  social 
knowledge,  is  its  restriction  to  a  very  small  fraction  of  the 
community.  Progress  in  the  physical  sciences  is  initiated  in 
the  laboratory,  without  any  considerable  participation  by 
outsiders,  but  progress  in  social  science  depends  on  the  atti- 
tude if  not  on  the  consent  of  the  community,  and  therefore  the 
socialization  of  social  knowledge  becomes  one  of  the  indispen- 
sable elements  in  social  progress. 

The  handling  of  social  problems  has  been  confined,  in  the 
past,  to  a  very  small  minority  of  each  community.  An  aris- 
tocracy or  plutocracy  has  taken  charge  of  domestic  and  for- 
eign affairs,  and  has  made  the  decisions  on  which  community 
well-being  has  depended.  "With  the  advent  of  "popular  gov- 
ernment." certain  of  these  decisions  have  been  turned  over  to 
the  masses  of  the  people  or  have  been  seized  by  them.  The 
essential  economic  decisions,  however,  are  still  made  by  the 
owners  of  private  wealth.  If  there  is  to  be  an  organization 
of  economic  society  that  will  function  successfully  and  auton- 
omously, the  knowledge  on  which  the  decisions  affecting 
economic  policy  are  made  must  be  public  property.  Until 
that  stop  is  taken  the  economic  life  of  society  will  be  directed 
by  the  chance  desires  of  those  who  own  the  machinery  of 
production. 

Social  students  will  accumulate  knowledge  and  reach 
deductions,  but  that  is  not  enough.  The  task  is  not  completed 
until  the  results  of  their  researches  are  common  property. 

Recent  inventions  and  discoveries  make  the  distribution 
of  knowledge  comparatively  easy.  Cheap  paper,  rapid  print- 
in  cr,  the  newspaper,  the  magazine,  the  book,  have  all  facilitated 
the  scattering  of  information  to  those  who  could  read,  and  in 
tin-  -\vestc-rn  world  this  is  more  than  nine-tenths  of  the  adult 
population.  For  those  who  cannot  read,  the  camera  is  an 


ECONOMIC  ORGANIZATION  149 

educational  power.  The  machinery  for  public  education— the 
schools,  the  press,  the  lecture-platform,  has  grown  within  a 
century  to  a  point  that  renders  possible  the  speedy  distribu- 
tion of  knowledge  to  the  most  remote  parts  of  the  world.  One 
of  the  greatest  single  steps  in  the  reconstruction  of  the  eco- 
nomic life  of  the  world  is  the  use  of  this  machinery  to  dis- 
tribute such  information  as  is  essential  to  a  clear  understand- 
ing of  the  economic  problem  and  the  normal  course  of  its 
development. 

9.    Next  Steps 

Accept  the  foregoing  analysis,  and  what  lies  immediately 
ahead  of  society? 

1.  The  socialization  and  persistent  distribution  of  extant 
knowledge. 

2.  A  decision  -with  regard  to  the  next  great  social  experi- 
ment. 

3.  The  selection  of  the  group  best  able  to  carry  through 
this  adventure. 

4.  The  preparation  of  this  group  for  its  task. 

5.  The  placing  of  the  task  upon  their  shoulders,  and  the 
backing  of  them  with  every  possible  assistance. 

The  working  out  of  the  detail  of  this  program  is  far  afield 
from  the  purpose  of  the  present  study,  which  must  confine 
itself  to  the  problems  of  world  economies.  L-'t  it  suffice  to 
indicate  here  that  in  pursuance  of  the  program  outlined  above 
there  must  be  inaugurated  a  widespread  propaganda  the 
object  of  which  will  be  to  get  the  facts  and  their  implications 
to  the  people:  the  facts  regard intr  the  disintegration  of  ilv 
present  order;  regarding  the  possibilities  of  a  new  society; 
regarding  the  next  steps  that  are  necessary  in  its  establish- 
ment. 

This  propaganda  is  being  carried  on  by  those  branches  of 
the  labor  movement  that  are  concerned  with  the  workincr  out 
of  a  new  order  of  society.  Since  it  is  apparent  that  the 


150  THE  NEXT  STEP 

organized  producers  will  be  the  dominant  element  in  the  new 
society,  they  are  its  logical  architects  and  builders.  It  is  to 
this  end  that  the  energies  of  labor  education  must  be  directed. 
When  the  producers  are  ready  for  their  stupendous  task, 
and  when  the  time  is  ripe,  they  will  assume  the  responsibility 
for  erecting  the  superstructure  of  the  new  society.  They  will 
make  costly  blunders,  some  of  which  may  be  anticipated.  They 
will  be  compelled  to  face  difficult  questions  of  tactics.  In  the 
course  of  their  activities  they  will  make  day-to-day  decisions 
that  will  play  a  vital  part  in  the  ultimate  outcome  of  their 
experiments. 

10.     The  Success  Qualities 

For  the  rest,  the  movement  for  a  producers'  society  needs 
an  emphasis  on  those  qualities  that  will  bring  triumph  out  of 
defeat,  and  that  can  convert  the  most  menacing  situations 
into  assets: 

1.  A  willingness  to  learn  better  ways  of  doing  things,  and 
to  abandon  outgrown  ideas  and  ideals  for  new  ones. 

2.  A  faith  that  will  stand  up  under  failure. 

3.  A  vision  that  sees  beyond  a  lowering  horizon. 

4.  The  courage  to  keep  looking  and  trying,  even  in  the  face 
of  difficulties  that  seem  insuperable. 

All  human  achievement  is  conditioned  on  these  qualities, 
and  their  development  is  a  pre-requisite  to  successful  experi- 
ment. 


VIII.     ECONOMIC    LIBERATION 
1.     Why  Organise? 

FROM  many  sides  echo  voices  urging  the  human  race  to 
co-operate  for  the  general  advantage.  The  world,  torn  and 
distracted  by  the  subsistence  struggle,  yearns  toward  a  method 
of  life  that  will  ease  the  strain  and  relieve  the  heart-ache  that 
are  involved  in  the  present-day  conflict.  It  seems  that  this 
world-need  can  be  met  by  a  world  economic  organization 
built  along  the  lines  of  productive  activity  controlled  by  those 
who  produce,  and  sufficiently  powerful  to  utter  the  final  word 
with  regard  to  the  disposition  of  resources  and  raw  materials, 
of  transport,  of  credit,  and  of  the  more  general  phases  of 
production  and  consumption. 

There  can  be  little  difference  of  opinion  concerning  the 
necessity  for  some  such  organization.  A  question  may  well 
be  raised,  however,  with  regard  to  the  probable  developments 
of  so  vast  a  world  machine.  "What  are  its  ultimate  purposes  ? 
Why,  in  the  last  analysis,  do  men  seek  to  improve  the  economic 
and  political  structure  of  human  society?  Why  organize  at. 
all? 

There  is  a  clear-cut  answer  to  these  questions :  Men  desire 
changes  and  improvements  in  their  economic  life  in  order  that 
they  may  attain  greater  freedom,  and  they  organize  for  the 
purpose  of  making  these  changes  and  improvements  more 
easily. 

Man  is  subject  to  many  drastic  limitations.  First,  there 
are  the  physical  limitations  of  his  own  body — its  height,  its 
reach,  its  flexibility,  its  resistance,  its  fund  of  enenry.  Then 
he  is  limited  by  nature — by  the  climate,  the  altitudes,  the 
fertility  of  the  soil,  the  deposits  of  minerals,  the  movement 

151 


152  THE  NEXT  STEP 

of  water.  Man  is  further  limited  by  habit,  custom,  tradition, 
and  by  the  opinions  of  his  friends  and  neighbors.  Again,  he 
is  limited  by  ignorance,  by  fear,  by  cowardice,  by  prejudice, 
and  by  his  own  lack  of  understanding  as  to  the  true  nature 
of  freedom.  In  addition  to  all  of  these  restrictions  he  is 
limited  by  the  economic  bonds  that  hold  him  to  his  job,  that 
tempt  him  with  gain,  that  drive  him,  day  by  day,  to  seek  for 
food,  clothing,  shelter:  for  comfort  and  luxury. 

Only  dimly  do  men  realize  these  limitations.  The  more 
they  learn,  the  more  clearly  they  understand  the  nature  of 
the  bonds  that  hold  them,  and  the  better  are  they  prepared 
to  break  down  the  most  hampering  barriers,  and  to  follow 
where  aspiration  and  hope  beckon.  Yet,  even  among  the 
masses  of  the  people,  who  have  had  little  time  to  learn,  and 
less  in  which  to  reflect,  there  is  a  persistent  longing  to  be  free. 
The  plea  for  liberty  always  awakens  a  response  in  them 
because,  through  their  own  lives  they  come  into  such  intimate 
contact  with  the  hateful  burdens  that  oppression  lays  upon 
its  victims. 

The  longing  to  be  free  is  probably  one  of  the  most  widely 
distributed  of  human  qualities,  and  one,  moreover,  which  men 
share  with  many  of  the  higher  animals.  The  "World  "War 
focussed  this  longing  and  raised  it  to  a  pitch  of  frenzied 
exaltation,  under  the  spell  of  which  hundreds  of  millions 
fought  and  worked,  as  they  thought,  for  liberty.  The  fact 
that  they  were  mistaken  in  their  ideas  regarding  the  purposes 
of  the  war  docs  not  in  any  sense  detract  from  the  sincerity  of 
their  desires,  nor  from  the  earnestness  of  their  efforts. 

The  "World  "War  fervor  was  typical  of  the  eager  attempts 
that  men  have  made  at  intervals  all  through  history,  to  win 
freedom  against  immense  odds.  During  the  past  three  or 
four  centuries  this  struggle  has  been  particularly  severe  in 
the  political,  the  social  and  in  the  economic  fields  alike. 

Although  the  Dark  Ages  almost  obliterated  the  expression 
of  creative  energy  in  the  Western  World,  the  Renaissance,  the 


ECONOMIC  LIBERATION  153 

Reformation  and  the  industrial  revolution,  following  in  quick 
succession,  proclaimed  its  reawakening,  and  to-day  there  is 
scarcely  a  group  of  people — in  Egypt,  in  Ireland,  in  Korea, 
in  the  Philippines,  or  in  dark,  enslaved  Africa  that  does  not 
hold  a  molten,  mass  of  sentiment  surging  toward  freedom, — 
a  seething,  smouldering  pressure,  continually  seeking  an 
outlet. 

Economic  emancipation  does  not  include  all  aspects  of 
freedom.  Many  other  chains  remain  to  be  broken.  But  the 
economic  organization  of  the  world  would  be  one  step  in  the 
direction  of  freedom,  and  would  burst  many  a  bond  that  now 
holds  the  human  race  in  subjection. 

2.    Freedom  from  Primitive  Struggle 

The  first  step  in  economic  liberation  is  to  free  man  from 
the  more  savage  phases  of  the  life  struggle — the  struggle 
against  nature :  the  struggle  with  other  men. 

Since  those  far-off  times  when  men  lived  by  tearing 
away  clusters  of  nuts,  by  picking  berries,  by  digging  roots, 
by  snaring  fish  and  by  clubbing  game,  they  have  been  com- 
pelled to  wrest  from  nature  the  means  of  subsistence.  In  this 
struggle,  there  have  been  the  terrible  phantoms  of  hunger, 
thirst,  cold,  darkness  and  physical  suffering:  of  every  sort, 
driving  men  on.  He  who  won  in  the  contest  with  nature  was 
able  to  escape  the  worst  of  these  miseries,  but  be  who  lost 
was  tortured  by  them  as  long  as  life  remained  in  bis  body. 
The  raee  is  saddled,  even  to-day,  by  an  oppressive  fear  of 
these  physical  hardships  that  makes  the  strongest  a  willing 
servant  of  any  agency  that  will  promise  to  ward  thorn  off. 

The  first  victory  that  men  must  gain  in  their  battle  for 
economic  liberation,  will  be  won  when  hunger,  thirst,  cold. 
darkness  and  other  aspects  of  physical  suffering  are  banished 
from  the  lives  of  all  people  as  effectively  as  yellow  fever  and 
cholera  have  been  banished  from  the  western  world  during 
recent  generations. 


154  THE  NEXT  STEP 

This  end  has  already  been  attained  for  the  favored  few  in 
most  countries,  but  famine  still  stalks  periodically  among  the 
peoples  of  Asia,  and  even  Europe,  since  the  Great  "War,  has 
felt  its  grip.  Among  the  industrial  workers  of  the  imperial 
countries,  and  among  the  citizens  of  the  exploited  countries, 
the  wolf  is  a  far  more  frequent  visitor  than  is  the  fatted 
calf. 

Liberation  from  this  "widespread  physical  hardship  can  be 
achieved  by  producing  enough  of  the  necessaries  of  life  to 
feed,  clothe  and  house  all  of  the  people  of  the  world,  and  by 
supplementing  an  adequate  production  by  a  system  of  distri- 
bution that  will  eliminate  hunger  and  cold.  Machine  indus- 
try has  made  such  an  achievement  possible.  It  only  remains 
for  a  world  economic  organization  to  co-ordinate  the  resources, 
the  productive  machinery  and  the  labor,  and  to  distribute  the 
commodities  produced  to  those  who  need  them. 

The  conflict  with  nature  is  but  one  aspect  of  the  primitive 
struggle  in  which  men  are  engaged.  In  addition,  there  is  the 
struggle  of  man  against  man ;  not  to  aid,  to  emulate,  to  excel, 
but  to  rob,  cripple  and  destroy. 

The  existing  economic  system  is  built  upon  the  assumed 
desirability  of  a  struggle  whose  outward  manifestations  are: 
Cl)  competition  between  economic  groups;  (2)  the  class  war 
between  owners  and  workers,  and  (3)  wars  between  the 
nations.  Throughout  the  business  world  one  establishment 
seeks  to  build  up  its  organization  by  wiping  out  its  competi- 
tors ;  one  class  seeks  to  win  supremacy  at  the  expense  of  a 
rival  class,  and  one  nation  seeks  to  found  its  greatness  on  the 
prostrate  remains  of  those  opposing  nations  that  it  has  been 
able  to  overthrow.  These  three  phases  of  competition  are 
accompanied  by  three  forms  of  war — the  economic  war,  the 
class  war  and  international  wars. 

All  three  forms  of  war  have  an  economic  background.  The 
economic  war  is  the  contest  for  resources,  trade,  markets, 
monopolies  and  investment  opportunities.  The  class  war 


ECONOMIC  LIBERATION  155 

between  the  exploiter  and  the  exploited,  grows  out  of  the 
economic  relations  existing  between  the  owner  and  the  worker. 
International  wars  are  fought  for  economic  advantage  —  for 
resources,  trade,  markets. 

The  object  of  all  war  is  the  destruction  of  a  rival  by 
resorting  to  those  measures  calculated  to  bring  the  desired 
result.  Since  all  is  fair  in  war,  the  end  (destruction)  justifies 
the  means,  no  matter  what  it  may  be. 

"What  need  is  there  to  speak  to  this  generation  of  the  devas- 
tation caused  by  these  wars?  of  the  killing,  the  maiming,  the 
famine,  the  disease,  the  disorganization  and  chaos? 

The  western  world  has  not  yet  recovered  from  the  latest 
international  war,  while  the  economic  war  and  the  class  war 
are  being  fought  on  the  six  continents  and  the  seven  seas. 
The  cost  of  wars  in  blood,  treasure,  happiness  and  usefulness 
is  an  intolerable  one.  The  chains  with  which  Mars  loads  the 
human  race  weigh  men  down  to  the  earth. 

The  organization  of  a  world  producers'  society  would  go 
far  toward  freeing  men  from  the  ravages  of  war.  The  neces- 
sity for  economic  competition  being  removed,  and  exploitation 
being  done  away  with,  the  basis  of  international  war  and  of 
the  class  war  would  be  swept  away.  Thus  the  same  economic 
world  organization  that  enabled  man  to  free  himself  from  the 
more  brutal  phases  of  the  struggle  with  nature  would  likewise 
enable  him  to  eliminate  the  principal  causes  of  war, 


3.     Freedom  from  Sc 

The  organization  of  a  producers'  society  would  do  more 
than  abolish  the  cruder  aspects  of  the  present  economic  strug- 
gle. It  would  lay  the  foundation  for  a  new  culture  founded 
on  the  dignity  and  the  worth  of  labor. 

There  are  two  groups  of  human  instincts  in  ceaseless  con- 
tention for  supremacy  —  the  possessive  and  the  creative.  Both 
are  of  immediate  economic  importance,  and  the  triumph  of  the 
one  usually  means  the  subordination  of  the  other.  The 


156  THE  NEXT  STEP 

instincts  which  urge  in  the  direction  of  acquisition  and  accu- 
mulation tend  to  make  the  man  a  conservator.  Once  let  him 
possess  an  abundance  of  the  world's  goods  and  his  chief 
object  is  to  hold  what  he  has  gained.  The  instincts  which 
urge  toward  construction  and  creation  tend  to  make  man  an 
innovator,  initiator,  an  improver.  The  side  of  man's  nature 
that  urges  him  to  possess,  directs  him  toward  wealth  and 
power.  The  side  of  his  nature  that  leads  him  to  create  points 
to  invention,  to  craftmanship,  to  artistry.  Thus  the  posses- 
sive and  the  creative  instincts  are  not  merely  at  odds.  Pos- 
session leads  to  status  while  creation  leads  to  improvement. 

There  are  some  natures  that  are  definitely  inclined  toward 
acquisition.  There  are  others  as  firmly  set  in  the  direction  of 
creation.  For  such  natures  the  social  standards  possess  little 
importance.  They  have  their  bent  and  they  follow  it.  The 
great  mass  of  men,  however,  have  no  positive  set  in  either 
direction.  Their  lives  will  be  primarily  possessive  or  pri- 
marily creative,  depending  upon  the  kind  of  training  that 
they  receive. 

Modern  society  lays  its  emphasis  on  possession  and  accu- 
mulation, and  upon  the  wealth  and  power  which  they  yield. 
The  owner  of  land  or  of  capital,  under  the  present  economic 
order,  is  not  required  to  work  for  his  living.  His  rents  and 
dividends  furnish  him  a  source  of  income  far  more  regular 
and  much  more  dependable  than  the  wage  of  the  worker,  or 
even  than  the  salary  of  the  man  higher  up.  The  rewards  of 
the  property  owner,  moreover,  are  far  larger  than  those  of 
the  worker.  Compare  the  income  tax  returns  of  Germany, 
Britain  and  the  United  States  with  the  wage  scales  from  the 
same  countries.  The  incomes  above  ten  thousand  dollars 
(two  thousand  pounds  or  40,000  marks  in  pre-war  values) 
per  year  are  derived  largely  or  exclusively  from  the  owner- 
ship of  property.  It  pays  far  better  to  own  than  it  does  to 
work.  The  ownership  of  capital,  like  the  ownership  of  land, 
carries  with  it  power  over  those  who  must  use  the  capital  and 


ECONOMIC  LIBERATION  ]57 

work  the  land,  thus  setting  up  an  owning  group  or  class  which 
is  able  to  control  the  lives  of  the  workers,  at  least  to  the 
extent  of  taking  a  part  of  their  product  and  living  upon  it 
without  rendering  any  commensurate  service  in  return.  With 
the  economic  rewards  go  social  honors  and  distinctions,  and 
the  wealthy  enjoy  social  as  well  as  economic  privileges.  They 
develop  a  system  of  dress,  of  language,  of  manners  and  cus- 
toms that  will  distinguish  them  as  far  as  possible  from  the 
common  herd,  namely,  those  who  work  for  a  living.  Teblen 
describes  the  process  admirably  in  his  "Theory  of  the  Leisure 
Class."  The  leisure  class,  he  says,  has  its  origin  in  so?ne  form  of 
ownership,  on  which  it  builds  the  structure  of  its  prerogatives. 

The  existence  of  an  owning,  ruling  class  divides  society 
into  factions,  whose  contentions  threaten  the  destruction  of 
any  social  group  in  which  they  take  place.  From  the  intoler- 
able social  situation  which  they  create,  there  seems  to  be  but 
one  logical  means  of  escape,  and  that  is  through  the  establish- 
ment of  a  society  in  which  labor  and  not  parasitism  is  the 
ideal  toward  which  children  are  taught  to  strive. 

Such  a  society  would  shift  the  emphasis  from  possession 
to  creation  (production)  by  rewarding  the  worker  rather  than 
the  owner.  This  result  may  be  accomplished  quite  simply 
by  giving  the  chief  rewards  to  those  who  create,  and  by  deny- 
ing to  the  owner  any  direct  reward  for  his  ownership. 
Another  step  in  the  same  direction  could  be  taken  by  limiting 
individual  ownership  to  the  things  that  men  use.  and  concen- 
trating in  the  producing  group  the  ownership  of  all  produc- 
tive tools. 

"When  economic  rewards  are  withdrawn  from  possession 
and  given  to  creation,  it  will  pay  bettor  to  create  than  it 
will  to  own.  Furthermore,  since  ownership  of  itself  would 
involve  no  power  over  others,  another  important  incentive  to 
accumulation  would  be  removed. 

A  producers'  society,  as  a  matter  of  course,  would  accord 
the  most  honor  to  those  who  engaged  in  productive  activity. 


158  THE  NEXT  STEP 

thus  registering  the  social  opinion  in  favor  of  creating  rather 
than  of  possessing  and  exploiting.  With  the  economic  and 
the  social  rewards  going  to  producers,  the  young  of  each 
generation  would  learn  that  it  was  more  worth  while  to  be  a 
producer  than  to  be  an  owner. 

Again  a  producers'  society  would  aim  to  secure  the  com- 
mon participation  in  the  necessary  social  tasks — the  drudgery 
and  the  "dirty-work."  With  the  essential  work  performed  in 
part  by  all  able-bodied  persons,  no  stigma  would  attach  to 
those  who  were  engaged  in  it,  the  class  of  economic  pariahs 
would  be  eliminated,  and  each  participant  in  the  necessary 
economic  work  of  the  world  would  feel  that  he  belonged  to  the 
group  in  which  he  was  playing  so  important  a  role. 

"But,"  argues  the  doubter,  "all  of  this  is  against  human 
nature.  How  is  it  possible  to  expect  that  men  will  stop  pos- 
sessing, or  will  lose  the  desire  for  possession?" 

They  cannot  be  expected  to  do  either,  of  course.  But  it 
so  happens  that,  in  any  industrial  society,  the  group  living 
on  its  ownership  is  a  very  small  one  compared  with  the  group 
living  by  its  labor.  The  preference,  in  au  industrial  com- 
munity, can  therefore  easily  incline  to  labor  rather  than  to 
ownership.  As  for  the  chief  rewards  of  life  going  to  pro- 
ducers rather  than  to  owners,  this  is  historically  practicable. 
Greek  society  worked  out  au  elaborate  system  of  honors  and 
rewards  for  those  who  could  create.  Human  nature  has  not 
been  fairly  or  adequately  tested  in  recent  years.  Only  certain 
of  its  phases  have  been  developed  by  social  demands,  and  those 
phases — the  possessive  instincts — are  among  the  least  socially 
advantageous  of  human  qualities. 

Au  emphasis  on  production  rather  than  on  accumulation 
would  have  another  important  result — more  important,  in 
a  sense,  than  any  of  those  named.  Tt  would  establish  a  feel- 
in  <?  of  self-respect  amoncr  those  who  work  by  giving  them  the 
only  conceivable  economic  basis  for  self-respect — the  owner- 
ship and  control  of  their  jobs. 


ECONOMIC  LIBERATION  159 

While  one  man  owns  a  job  on  which  another  man  must 
work  in  order  to  live,  the  job-owner  is  the  master,  and  the 
job-taker  is  his  vassal.  Necessarily,  the  vassal  occupies  a 
position  of  servility.  "When  he  asks  for  an  opportunity  to 
wTork,  he  is  asking  for  an  opportunity  to  live.  When  he  takes 
a  job  he  is  binding  his  life  and  his  conduct  under  terms  pre- 
scribed by  the  job-owner.  If  he  has  a  family,  or  owns  a  home, 
or  is  in  any  way  tied  to  one  spot,  he  is  doubly  bound. 

The  establishment  of  a  producers'  society  would  make 
each  man  his  own  master  in  somewhat  the  same  sense  that  the 
farmer  or  the  artisan  who  owns  his  land  or  tools  is  the  arbiter 
of  his  own  economic  destiny.  That  is,  he  would  own  his  job 
and  share  in  its  control. 

Thus  society  would  eliminate  the  inequalities  that  are 
now  created  by  the  concentration  of  ownership  and  power  in 
a  few  hands,  and  would  establish  a  relative  equality  among 
those  who  produced.  The  great  fear  of  the  modern  worker — 
the  fear  of  unemployment  or  job-loss — would  also  be  elimi- 
nated, since  the  producers,  in  a  society  of  which  they  had 
control,  would  be  able  to  hold  their  own  jobs. 

These  various  means  would  serve  to  dignify  labor  and 
production,  and  to  establish  a  society  in  which  prestige  and 
honor  would  attach  to  creation  rather  than  to  ownership. 

4.     Wisdom-  hi  Consumption 

One  of  the  chief  weapons  of  a  leisure  class  is  some  mark 
that  will  easily  distinguish  ils  members  from  the  workers. 
This  mark,  in  modern  society,  is  conspicuous  consumption. 
By  the  quality  and  style  of  its  wearing  apparel,  by  the  scale 
of  its  housing,  by  the  multitude  of  its  possessions,  its  luxu- 
ries and  its  enjoyments,  the  leisure  class  sets  itself  apart  from 
the  remainder  of  the  community,  advertising  to  the  world,  in 
the  most  unmistakable  manner,  its  capacity  to  spend  more 
than  the  members  of  the  working  class  can  earn. 

This  need  for  distinction  through  consumption  has  set  a 


1GO  THE  XEXT  STEP 

living  standard  which  the  less  well-to-do  families  seek  to 
emulate.  Among  the  leisured,  there  is  an  eager  race  to  decide 
•which  can  spend  the  most  lavishly,  while  those  of  less  economic 
means  make  a  determined  effort  to  put  on  front  and  to  appear 
richer  than  they  really  are. 

The  result  of  this  competition  among  neighbors  is  an 
absurd  attention  to  the  quantity  and  to  the  cost  of  possessions, 
with  a  comparative  indifference  to  their  intrinsic  beauty  or 
to  their  utility.  Xowhere  is  this  better  illustrated  than  in 
the  rapidly  altering  styles  of  woman's  dress.  One  season 
silk  stockings  and  low-cut  waists  are  worn  in  the  middle  of 
winter  :  the  next,  expensive  furs  appear  in  mid-summer.  "With 
little  reference  to  artistic  effect,  and  with  even  less  attention 
to  the  needs  of  the  individual,  the  procession  of  the  styles 
moves  across  the  social  stage  with  tons  of  millions  eagerly 
watching  for  the  tiniest  change  in  cut  or  color. 

The  devotion  of  an  entire  class  to  this  conspicuous  leisure 
has  no  social  justification  save  the  silly  argument  that  "it 
makes  work."  It  is  one  of  the  logical  products  of  a  stratified 
or  class  society  where  the  lower  classes  seek  to  ape  the  upper 
classes,  while  the  latter  engage  in  a  mad  scramble  to  deter- 
mine which  shall  sot  the  most  grotesque  standards  of  social 
conduct. 

A  producers'  society  will  of  necessity  take  a  stand  of  far- 
reaching  consequence  on  the  question  of  consumption.  In  the 
first  place  it  will  rcali/e  that  one  of  the  most  signal  failures 
of  the  present  order  lies  in  the  inability  of  the  people  to  find 
either  happiness  or  growth  in  the  accumulation  of  possessions. 
IP  the  multitude  of  things  owned  would  satisfy  men's  needs, 
the  upper  clashes  of  the  present  society  would  be  the  happiest 
that  the  world  has  ever  known,  since  they  are  able  to  com- 
mand a  quantity  and  a  variety  of  things  that  far  surpasses 
previous  historic  records.  Instead  of  bringing  happiness, 
however,  these  things  have  merely  brought  care,  anxiety  and 
finally  disillusionment.  Xow,  as  always,  it  is  true  that  a  man's 


ECONOMIC  LIBERATION  161 

life  does  not  consist  in  the  abundance  of  his  possessions,  or, 
as  Carlyle  puts  it,  "Not  what  I  have  but  what  I  do  is  my 
kingdom." 

The  citizens  of  a  producers'  society  will  therefore  teach  to 
their  children,  and  will  practice  an  abstemiousness  in  the 
midst  of  plenty — a  withdrawal  from  possessions — in  order 
that  the  body  may  have  enough,  but  not  too  much,  and  that 
the  spirit  may  be  freed  from  an  undue  weight  of  things.  The 
Greeks  understood  the  principle  well;  so  did  the  American 
Indians.  They  desired,  not  many  things,  but  an  enrichment 
of  life,  which  they  realized  could  come  only  through  under- 
standing, tranquillity  and  inner  growth. 

As  a  matter  of  course,  a  producers'  .society  will  enforce  the 
axiom:  No  luxuries  for  any  until  the  necessaries  are  supplied 
to  all.  This  corresponds  with  the  well-established  practice  of 
many  primitive  peoples.  It  is  likewise  the  application  of  the 
highest  ethical  principles  to  economic  life,  and  is  the  course 
of  procedure  that  man's  most  elemental  sense  of  justice 
demands. 

A  more  or  less  rigid  adherence  to  the  principle  of  neces- 
saries first,  and  an  understanding  of  the  futility  of  seeking 
for  happiness  through  possessions,  will  place  a  ri^id  1  imita- 
tion upon  the  amount  of  time  devoted  to  satisfying  economic 
needs,  and  will  release  a  generous  share  of  time  and  energy 
that  may  be  devotfd  to  supplying  the  other  needs  of  man. 
Heretofore,  leisure  has  been  absorbed  by  one  da-s  or  L'ronp. 
Under  a  producers'  society  it  would  be  distributed,  lik»  any 
other  social  advantage,  on  an  equitable  basis. 

Already  sufficient  advances  have  been   made  in   machine 
production  to  enable  the  human  race  to  produce  the  ee< 
necessaries  of  each  day  in  a  few  hour?  of  labor— two,  or  t 
or  four,  perhaps.     It  remains  for  a  producers'  society  to  take 
advantage  of  this  productive  efficiency,   and  to   convert 
increased  productivity,  not,  as  at  present,  into  mere  goods, 

but  rather  into  more  free  time  for  people. 
11 


16-2  THE  NEXT  STEP 

5.     Leisure  for  Effective  Express-ion 

The  primary  aim  of  a  producers'  society  would  be  leisure 
rather  than  goods — an  opportunity  for  expression  rather  than 
an  increase  in  the  amount  of  possessions.  One  of  its  great 
tasks  "would  therefore  be  the  education  of  its  citizenship  in 
the  effective  use  of  leisure. 

This  new,  socialized  leisure,  which  yesterday  was  a  privi- 
lege of  the  ruling  classes  and  of  many  of  the  artisans  and 
farmers,  which  is  to-day  the  heritage  of  primitive  peoples, 
and  which  has  been  so  largely  lost  in  the  rush  of  machine 
production,  will  be  used:  (1)  to  make  and  to  maintain  social 
contacts;  (2)  for  creative  activities;  (3)  for  recreation,  and 
(4)  for  whatever  other  means  are  necessary  to  promote  the 
growth  of  the  individual. 

An  effective  society  must  be  composed  of  effective  indi- 
viduals. In  no  other  way  can  a  high  social  standard  be  main- 
tained. The  growth  of  the  individual,  in  a  modern  commun- 
ity depends,  in  large  measure,  on  the  way  in.  which  he  uses 
his  leisure. 

6.     Culture  and  Human  Aspiration 

At  various  stages  in  the  development  of  society  there  have 
emerged  cultures  founded  on  some  particular  group  of  human 
aspirations.  Thus  the  forward-looking  side  of  man's  nature 
expressed  itself. 

After  he  had  finished  the  daily  tasks  by  means  of  which 
he  earned  a  subsistence,  or,  more  usually,  as  a  member  of  a 
leisure  class  that  was  exempt  from  the  necessity  of  labor, 
the  man  dominated  by  strong  creative  impulses  sought  to 
embody,  in  some  concrete  form,  the  desires  which  he  felt 
springing  up  within  him,  and  which  could  not  be  satisfied 
by  physical  activity.  lie  turned,  therefore,  to  drawing,  to 
painting,  to  music,  to  speculation,  to  discussion. 

The  present  age  has  not  as  yet  developed  its  culture,  and 
it  seems  now  as  though  capitalism,  with  its  heritage  of  revolu- 


ECONOMIC  LIBERATION  16:5 

tion,  and  its  curse  of  instability  and  hurry,  would  not  persist 
long  enough  to  establish  a  well-defined  culture.  Hence,  in  the 
present  society,  multitudes  feel  that  certain  finer  things  are 
excluded  from  their  lives  because  the  ground  is  so  littered 
with  possessions,  and  because  life  is  too  harried  and  too  sordid 
to  give  them  place. 

These  forces,  the  creative  impulses  of  the  artist  and  the 
builder,  yearn  unspeakably  for  expression.  Each  human 
breast  holds  a  void  that  is  the  result  of  their  suppression,  and 
it  is  this,  perhaps,  more  than  anything  else,  that  accounts 
for  the  unrest  and  dissatisfaction  that  are  so  characteristic 
of  the  present  generation. 

In  the  past  only  the  favored  few  had  a  chance  to  express 
their  most  holy  aspirations.  The  development  of  modern  indus- 
try, with  its  facility  in  the  production  of  livelihood,  promises 
a  time,  and  that  at  no  very  great  distance,  when  this  oppor- 
tunity may  be  common  property,  and  men  everywhere  may  be 
able  to  participate  in  that  unending  search  after  love,  beauty, 
justice,  truth — the  highest  of  which  humanity  is  callable. 

All  of  these  things  lie  outside  the  realm  of  economies,  yet 
none  of  them  is  possible  for  the  masses  of  mankind  until  there 
is  established  a  system  of  economic  life  that  will  provide  the 
necessaries  upon  which  physical  health  depends,  together  with 
an  amount  of  leisure  sufficient  to  enable  a  generation  to  find 
itself. 

This  is  the  goal  toward  which  men  are  working  in  their 
efforts  to  organize  economic  life,  as  they  strive  to  provide  a 
fA  dwelling-place  for  the  descendants  of  the  world's  seventeen 
hundred  millions. 


WHAT  TO  READ 

No  reader  should  accept  the  statements  made  in  this  book 
unless  they  appeal  to  his  reason  and  correspond  with  his 
experience,  nor  should  he  reject  them  merely  because  they 
run  counter  to  his  prejudices  or  his  convictions.  If  the  sub- 
ject-matter of  the  book  is  as  important  as  the  author  believes 
that  it  is,  the  reader  should  not  stop  with  these  brief  chapters, 
but  should  search  farther.  The  many  recent  articles,  pam- 
phlets and  books  devoted  to  economic  and  social  reconstruc- 
tion give  an  excellent  chance  for  selection.  Here  are  a  few 
suggestions : 

H.  deB.  Gibbins  has  written  one  of  the  best  descriptive 
books  on  the  economic  changes  surrounding  the  industrial 
revolution.  ("Industry  in  England"  London,  Methuen, 
1896.)  See  also  his  "Economic  and  Industrial  Progress  of 
the  Century"  (London,  Chambers,  UK):',). 

Supplement  this  by  reading  another  old  book,  "Recent 
Economic  Changes,"  by  D.  A.  "Wells.  (New  York,  Appleton, 
1898.) 

More  up  to  date,  and  in  the  same  field,  are  "The  Great 
Society,"  (Graham  Wallas,  New  York,  Macmillan.  1914, 
Chapter  I);  "Economic  Consequences  of  the  Peaee. "  J.  M. 
Keynes,  (New  York,  Ilarcoiirl,  1920.  Chapter  II);  "The 
Fruits  of  Victory,"  Norman  Angell  (Glasgow,  Collins,  1921  ) 
Chapters  I  and  II. 

The  economic  chaos  resulting  from  the  war  has  been 
described  with  journalistic  accuracy  by  Frank  A.  Vanderlip, 
American  banker,  in  his  "What  Happened  to  Europe?' 
(New  York,  Macmillan,  1910)  and  in  "What  Noxt  in 
Europe?"  (New  York,  Harcourt.  1922).  The  European 
situation  is  dealt  with  in  great  detail  by  the  "Manchester 

165 


166  THE   NEXT   STEP 

Guardian  Commercial."  Beginning  with  April  20,  1922,  the 
"Commercial"  has  published  a  very  complete  series  of  articles 
under  the  general  editorship  of  J.  M.  Keynes.  The  series  is 
entitled  ''Reconstruction  in  Europe."  "America  and  the 
Balance  Sheet  of  Europe"  (J.  F.  Bass  and  H.  G.  Moulton, 
New  York,  Ronald  Press,  1921)  is  a  study  by  two  experts 
that  goes  into  great  detail  with  regard  to  budgets,  public 
finances,  exchange  rates  and  the  like.  "Our  Eleven  Billion 
Dollars"  (Robert  Mountsier,  New  York,  Seltzer,  1922)  gives 
the  same  facts,  brought  up  to  date  and  popularized. 

The  science  of  economic  organization  is  approached  from 
three  quite  different  positions.  First,  there  are  writers  who 
discuss  ways  of  making  the  economic  mechanism  efficient. 
("Theory  and  Practice  of  Scientific  Management,"  Boston, 
Houghton  Miffiin,  1917;  "The  Administration  of  Industrial 
Enterprises,"  Edward  David  Jones,  New  York,  Longmans, 
1920;  "Principles  of  Scientific  Management,"  F.  W.  Taylor, 
New  York,  Harpers,  1911.)  In  the  second  place,  there  are 
writers  like  Thorstein  Vebleri  ("The  Engineers  and  the  Price 
System,"  New  York,  Huebsch,  1921,  and  "The  Theory  of 
Business  Enterprise,"  New  York,  Scribners,  1904)  and  H.  L. 
Gantt  ("Organization  for  Work,"  New  York,  Harcourt, 
1919)  who  desire  to  see  vital  changes  made  in  the  aims  of  the 
whole  economic  order.  Third,  there  are  reformers  and  radi- 
cals who  write  of  a  re-made  or  revolutionized  economic  order. 

At  the  present  time  these  radical  writers  fall  into  three 
general  groups :  (1)  The  Syndicalists  of  France,  (2)  the  Guild 
Socialists  of  Britain,  and  (3)  writers  who  describe  actual 
economic  experiments  that  are  going  on  in  Russia,  and  to  a 
lesser  degree  elsewhere.  (Note  that  the  "One  Big  Union" 
movement  of  Canada  and  Australia  and  the  "Industrial 
Workers  of  the  World"  movement  in  the  United  States  have 
produced  much  controversial  material  but  little  constructive 
writing.) 

French  Syndicalism  is  well  presented  by  E.  Pataud  and 


WHAT   TO   HEAD  1G7 

E.  Pouget  ("Syndicalism,"  Oxford,  1913)  ;  by  Bertrand  Rus- 
sell ("Proposed  Roads  to  Freedom,"  New  York,  Holt,  l!)l!h 
and  by  Georges  Sorel  ("Reflections  on  Violence,"  Xe\v  York 
Hucbsch,  1912). 

The  case  for  Guild  Socialism  is  stated  by  A.  R.  Orage 
("National  Guilds,"  London,  Bell,  19U),  by  G.  R.  S.  Taylor 
("The  Guild  State,"  Allen  and  Umvin,  1919),  and  by  G.  D. 
II.  Cole  ("Self-Government  in  Industry,"  London,  Bell, 
1918,  "Chaos  and  Order  in  Industry,"  London,  Methuen, 
1920,  and  "Guild  Socialism  Re-stated,"  London,  Parsons 
1920). 

Actual  experiments  in  the  control  of  economic  life  by  the 
producers  are  described  by  C.  L.  Goodrich  ("The  Frontier  of 
Control,"  New  York,  ILircourt,  1920),  who  seeks  to  answer 
the  question:  How  much  control  over  industry  do  the  rank 
and  tile  of  those  who  work  in  it  and  their  organizations  in 
fact  exercise?  "The  Collectivist  State  in  the  Making." 
(Emil  Davies,  London,  Bell,  1914)  and  "Socialism  in  Tlieory 
and  Practice,"  (TI.  W.  Laidler,  New  York,  Mai-mil  Ian.  1919), 
cover  somewhat  the  same  ground.  The  AYhiiley  Committee, 
in  its  "Report  of  an  Enquiry  into  "Works  Committee*" 
(Great  Britain,  Labor  Ministry1)  goes  into  detail  on  this 
point.  The  experiments  in  Russia  are  nowhere  adequately 
covered.  "The  Soviets  at  "Work"  (Lenin)  was  a  prediction 
and  a  hope  rather  than  a  review  of  achievements.  More 
recent  books  have  been  either  violently  partisnn  or  else  so 
superficially  descriptive  that  they  conveyed  no  idea  of  the 
actual  state  of  the  economic  experiment,  ll  is.  of  course,  in 
Russia,  that  the  experiments  in  workers'  control  are  beinir 
carried  forward  on  the  largest  and  ino>t  complete  scale. 

There  are  many  other  books  in  English,  bodies  in  German. 
French  and  Russian,  pamphlets,  magazine  articles  by  the 
thousands,  and  reports  of  special  investigations  in  various 
technical  fields,  all  of  which  oftvr  ample  opportunity  for  fur- 
ther study  along  the  lines  suggested  in  this  book. 


INDEX 


Acquisition,  menace  of  ....... 

Administration,  basis  of  world 
Administrative  and  producing 

groups  ................... 

Administrative  authority,  con- 

centration of  ............. 

Administration  boards,  func- 

tion of   .................. 

America,  resource  monopoly  of 
American  imports    .......... 

American  industry,  phases  of. 
Association,  scope  of  ......... 

Authority,  centralization  of  .  .  . 

Bankers,  as  arbiters  of  indus- 

try ...................... 

Bankers,  power  of  ........... 

Barriers  to  progress  ......... 

Basic  industries,  and  resources 
British  foreign  investments.  .  . 
Brotherhood,  new  possibilities 

of  ....................... 

Budget  board   .............. 

Budget  deficits  ............. 

Business  and  geographic  lines 
Business  federation,  develop- 

ment of   ................. 

Business  organization,  nature 

of  ....................... 

Business,  world  character  of.  . 

Capita],    transfers    of   to    pro- 
ducer groups   ............. 

Capitalism  and  nationalism.  .  . 
Capitalism  and  profiteering... 
Capitalism  and  the  class  strug- 


156 
119 

111 
81 

122 
19 

12.3 
59 
53 
81 


102 

102 

147 

19 

39 


20 

m 

30 

62 

ior> 

61 

62 


Capitalism,  growth  of 

Capitalism     in     the     Western 
world 

Capitalism,  initiative  under... 

Capitalism,  limitations  on.  .  .  . 

Capitalism,  modifications  in..  . 

Capitalism,  plutocracy    under. 

Capitalim,  world  role   of 

Capitalist  experiment    

Catastrophe,  menace  of 

Centralization,  in  American  in- 
dustry   

Chance,  part  of  in  progress.  .  . 

Change  and  chaos   

Chaos  and  change 

Class  struggle,  and  capitalism 

Climate  and  civilization 

Civilization  anil  climate 

Coal,  as  a  factor  in  civilization 

Coal,  production  of 

Coal  surplus,  whore  found.  .  .  . 

Commerce,   growth    of 

Commodity   basis  fur  money.. 

Communication,     as    a     world 
problem 

( 'ommuuication,       development 
of 

Competition,  and  war   

Competition,  justitirat  ion  of.  . 
Competition,  morality  of   .... 

Cumpetit'oti,  place  of    

<  'ompetit  ion.  profit  :' 
Confli'.-f.  and  economic  antago- 
nism   . 


66 

36 
63 

62 

140 

65 

62 

138 

14'! 


50 

1,1(5 
4S 
4S 
66 
45 
45 
7S 
17 


( 'onsumption,  oducat  ion  f>  r 


_ 
Capitalism,  assumptions 


<  'o-operation,  in  m      •        i 


Capitalism,  centralization  of,. 


Capitalism,  establishment  of.. 


Capitalism,  failure  of 


170 


INDEX 


Co-operative    world    organiza- 
tion      102 

Copper   production,   world  fig- 
ures        18 

Credit,  as  a  business  factor..    103 

Creation,    stimulation    of 157 

Creative  forces,  scope  for.  .  .  .    103 
Culture  ami  human  aspiration  162 


Debts  of  European  nations.  .  . 

Deficits,  in  European  budgets 

Depression,  present  condition 
of 

"Disputes,  adjustment  of 

Disputes  board 

Distribution  and  the  social 
revolution  

Distribution  of  world  wealth. 

Distribution    of    resources.... 

District  and  division  compared 

District  committees 

Divisional  congress,  organiza- 
tion of  

District  economic   units    

District  organization,  detail  of 

Divisional  and  district  organi- 
zation compared 

District  federations,  functions 
of 

Divisional  federations,  listed.. 

Divisional  organization  .. 


Economic   activity,   worldizing 
of ". 15 

Economic  affiliations,  .serif,    of     73 
Economic    authority,    location 

of    V Vi2 

Economic  aggression,  future  of 

Economic  bureaucracy    

Economic  causes  of  war 

Economic     change,     working 

la-is   for    

Economic    changes,    frequency 

of 

Economic   chaos,    source;    of.  .  . 
Economic    competition,    extent 

of  .. 


Economic  co-operation,  neces- 
sity for  20 

Economic  depression,  results 
of 31 

Economic  determinism,  effects 

of 15 

Economic  disaster,  menace   of     29 
Economic  disintegration,  signs 

of    31 

Economic  district  organization     90 
Economic  evolution  illustrated     G6 

Economic  federalism   59 

Economic  forms 60 

Economic  foundations 51 

Economic      foundations      for 

world  organization 23 

Economic  groupings,  listed   .  .      57 
Economic    institutions,    insta- 
bility of,  in  Europe 

Economic  interdependence  .  .  . 
Economic  isolation    no    longer 

possible 15 

Economic  justice,  need  for...      26 

Economic  leadership    85 

Economic  life,  chaos  in 67 

Economic  life,  new  basis  for.      47 
Economic     machinery,     owner- 
ship of   84 

Economic  muddle 28 

Economic       organization       by 

divisions    92 

Economic  organization,  details 

of    88 

Economic     organization,     need 

for  science  in 

Economic  needs    

Economic  needs,    enumerated. 
Economic  organization,  by  dis- 
tricts           "2 

Economic    organization,    lines 

of 58 

Economic  organization,  nature 

of 60 

Economic    organization,   world 

•  i  rt  "  O 

units  o  t    '  -j 

Economic  power,  and  the  bank- 
ers .  -  103 


INDEX 


171 


Economic  power,  for  the  pro- 
ducers    117 

Economic     problems,     enumer- 
ated       30 

Economic     problems,    growing 

complexity  of   15 

Economic  problems,  nature  of.  3(5 

Economic  program,    basis    for  22 
Economic    questions    of    world 

scope     121 

Economic  reconstruction,  prin- 
ciples   of    25 

Economic  rivalries  and  war..  41 
Economic    self-government    il- 
lustrated    SS 

Economic  statesmanship   23 

Economic  states  rights 59 

Economic  structure,  nature  of  69 
Economic  structure,    variation 

in fi9 

Economic  system,  divisions  of  57 

Economic  units,  character  of.  70 

Economic  units,    classes   of.  .  .  71 

Economic  units,  efficiency  in..  G9 

Economic  units,   integrity   of.  80 
Economic  units,    local    control 

of    S9 

Economic  units,  nature  of  local 

units    71 

Economic  units,   needs   of.  ...  79 
Economic    units,    productivity 

in SO 

Economic  world  outlook 2S 

Education,  function  of 141 

Education,  possibilities  of   .  .  .  1 12 

Energy,  rewarding  of S3 

Engineers,  present  position  of  34 
European    bankruptcy,    threat 

of 

European  budget  deficits   .... 

European  war  debts    

Exchange  and  credit  board.  .  .  12^ 

Executive,   functions   of    Mi 

Executives,  selection  of    L'<> 

Expansion,  costs    of    *>4 

Experience,   costs  of    141 

"Experiment,  social   value  of.  .  135 


Experiment,   uncertainty    of..  .  140 

Expert,   selection  of Mj 

Exploitation,  increase  of 41 

Federalism,   principle    of 53 

Federation,  in  social  organiza- 
tion    104 

Finance,  derangement  in 29 

Financial  imperialism,  costs  of  (it 
Financial     imperialism     illus- 
trated     39 

Food  Imports  of  Great  Britain  19 
Financial  stability,  basis  for.  29 
Forethought,  possibilities  of..  142 
Foreign  exchange,  demoraliza- 
tion of   31 

Foreign  investment  as  a  science  39 

Freedom,  human    desire    for.  .  152 

Freedom,  struggles  for 152 

Functional  economic    units    .  .  57 

Geographic  divisions,  organiza- 
tion of   92 

Geographic  units,  scope  of.  ...  72 
Government   control  of  indus- 
try    37 

Great  Britain,  food  import-  of  19 
Great  Britain,  foreign   invest- 
ments  of    39 

Great  revolution,  phases  of.  .  .  -19 

Hard  times,  history  of .".1 

Hiring  and  firing,  new  plan 

for >'.' 

Human  aspiration  and  culture  i':-' 

Human  effort,  results  of 4'i 

Human  nature,  limitation*  on  l-^ 

Human  values,  conservation  of  79 
Hunger  struggle,  elimination 

of 1  •"'•'• 

Ideal  and  the  real 71- 

I  improvements  and  bettermi  (its  U  > 

1  mperialism,   costs   of (l  > 

Imports  of  the   I'nited  States.  125 

]  ncome  distribution   :;'' 

Indebtedness,  since  the  war.  .  29 


172 


INDEX 


Industrial  change,  through  dis- 
covery and  invention 16 

Industrial  efficiency,  need  of.      25 

Industrial  federation,  groups 
of  108 

Industrial  federations,  prob- 
lems of 107 

Industrial  leaders,  change  in 
type  67 

Industrial  organization,  evolu- 
tion of  61 

Industrial  revolution,  and  pro- 
duction    47 

Industrial  revolution,  effects 
of  47 

Industrial  revolution,  spread 
of  15 

Industrial  revolution,  sudden- 
ness of  47 

Industrial  system,  characteris- 
tics of  101 

Indusrrial  waste 32 

Industrial  waste,  responsibility 
for  ".  32 

Industrialism,  effects  of 16 

Industries,   interrelation   of.  .  .      37 

Industry,  dependence  on  raw 
material  16 

Industry,  divisional  organiza- 
tion of  02 

Industry,  government  control 
of  37 

Initiative,  loss  of  under  capi- 
talism    63 

Initiative,  stimulation  of  ....      83 

Intelligent   social    direction...    145 

Iron  ore,  production  of 17 


Knowledge,  accumulations  of.    143 
Knowledge,  additions   to    ....    143 
Knowledge   through  suffering.    144 
Knowledge,  through  trial  and 
error    _    135 


Labor  federation,  development 

of    105 

Labor  units   of  value 129 

Laissez-faire,  abandonment  of  146 

Leadership,  changes  in  type  of  67 

Leadership,  classes   of    86 

Leadership  in  economic  affairs  85 
Leadership,  methods  of  selec- 
tion    87 

Leadership,  selection  of  execu- 
tives      86 

Leadership,  through  heredity.  87 
Leadership,  through  self-selec- 
tion     87 

Leadership,      through      social 

choice    88 

League  Covenant,  principles  of  23 

League  of  nations  failure.  ...  23 

Leisure,  function  of 162 

Liberty,  through  producers'  or- 
ganization      159 

Life,  continuity  of 14 

Limitations  on  capitalism.  ...  62 

Livelihood,  guarantee  of 45 

Livelihood  struggle   43 

Loans,   under  a  producers   so- 
ciety      131 

Local  autonomy,  necessity  for  60 

Local  economic  problems   ....  36 

Local  economic  units  described  71 
Local  economic    units,    details 

of    SS 

Local   federations,  character  of  109 
Local  federations,  problems  of  109 
Local  initiative  under  capital- 
ism      63 

Machine    ownership    and    self 

government    So 

Manufacturing,  divisions  of.  .  58 

Mass  life,  effects  of 139 

Mass  meetings,   for  public   is- 
sues    92 

Maximum  advantage,   law  of.  75 

Maximum  efficiency,   need    of.  78 
Maximum     returns,    essentials 

for   79 


INDEX 


173 


Meliorism,  interest  in 74 

Militarism,  in  Europe 35 

Minimum  outlay,  law  of 77 

Modern    business    methods    il- 
lustrated       39 

Modern  warfare,    costs    of (54 

Money  as  a  commodity 11'!) 

Money,  function  of 128 

Money,  future  of 128 

Money,  labor  as  a  basis  for.  .  129 

Money,  present  uses   of 129 

Monopoly  profit,  law  of 33 

National  boundaries  and  busi- 
ness    62 

Nationalism  ami    capitalism..  (>3 
Nationalism,       and       existing 

problems    121 

Nationalism,  and   world  prog- 
ress     <i3 

Nationalism,  costs  of   04 

Nationalism,  failure   of    <>4 

Nationalism,  narrowness    of.  .  (>4 

Natural  resources,    classified..  45 

Necessities,  provision    of    ....  1<>1 

Next  steps 149 

Next  war,   preparations   for..  35 


Organic  function    

Organic  nature  of  society.  .  .  . 

Organization,  difficulties   in... 

Organization,  need  for 

Organization  of  world  federa- 
tion   

Organization,  world  need  of.. 

Owners,  organization   of    .... 

Ownership  of  economic  machin- 
ery  

Paper  money,  issues  of 

Parliament,  for  the  world.  .  .  . 

Physical  hardship,  elimination 
of 

Plutocracy,  growth    of    

Policy,  decision  of  by  self- 
direct  ion  

Political  federation,  experi- 
ence with 


.54 
53 

152 
151 


Political  life,  organization  of.      7 


Poverty,  losses  through    . 


Power,  centralization  in  indus- 


Present-day  economic  problems 
Primitive  society,  economic  is- 


Producers,  future  of 

Producers,  power  to    

Producers'  federations,  by  dis- 
tricts    

Producers'  federations,  groups 
of    

Producers'     world     federation, 

character  of  

Producer  groups,  control  of 

industry  by  

Production,  necessity  for  .... 
Production  of  raw  materials.  . 
Productivity,  necessity  for 

maintaining 

Producing  and  administrative 

groups  

Production  versus  profit 

Profit  and  compel  it  ion  

i  'rofit  versus  we:  fare  

Profiteers,  air  1  c:j  [utalism  .... 

Progress,  barriers  1n 

!  'rogress  of  self-g  '  . 

1  'rogress  through  exj  erimeii!  . 


113 


I  .flaw  materials,  limitations  on 
L'aw  materials,  struggle  f<  >r,  , 
Reconstruction,  ecoiiomic  basis 

154  for    

ij,">    [    Reconstru  tion, 

.  •          -•       •••:.:.       ; 

j-5    I        problem    

;    Resources    and    raw    materials 
104   I        board    . 


174 


Resources,  relation  of  to  basic 

industries 19 

Results  and  initiative 84 

Sabotage    33 

Science  and  society 51 

Sectionalism,  failure  of 100 

Self-government   in    local    eco- 
nomic affairs 

Self-motivation,   need   of 

Self-government,  progress  of. 

Selection   of   leaders S7 

Separatism,   passing   of 20 

Servility,  elimination  of 1-3-3 

Shop  committees,  organization 

of    SS 

Social  administration,  difficul- 
ties of 74 

Social    book-keeping,    function 

of 1H3 

Social  change  and  intelligence  143 
Social  disaster,  as  a  means  to 

knowledge    144 

Social  drive,  basis  of S2 

Social  experiment,  basis  for..    14-3 
Social    federation    and    social 

activity 57 

Social  groups,  federation  of .  .      57 
Social  functions,  specialization 

of    5G 

Social  improvement    146 

Social  inertia  as  a  problem ...      82 
Social     knowledge,     accumula- 
tions of   143 

Social    knowledge,    limitations 

on    52 

Social     machinery     and     body 

machinery 54 

Social     organization,     of     the 

owners    , Gl 

Social     organization     through 

federation    104 

Social     organization,     through 

producers    117 

Social  philo«onhy,  restatement 

of    146 

Social  problems,  handling  of.    14S 


Social  relations,  growing  com- 
plexity of    56 

Social  revolution  ami  distribu- 
tion    46 

Social  science,  future  of 14S 

Social  science,  needs  of 146 

Social  science,  principles  of .  .  51 

Social  structure,  nature  of. 61,  69 

•Society,  as   an   organism 53 

Society,  science    of    52 

Sources  of  economic  waste.  .  .  32 

Soviet  Russia,  and  world  peace  34 
Specialists,  place  of  in  world 

administration    123 

Specialization   in   society 55 

Standard  Oil  Company 59 

Statesmanship,  economic  foun- 
dations of   23 

Success  qualities 150 

Suffering  a-s  a  basis  for  prog- 
ress     144 

Surplus,   effect   on   human   ef- 
fort    77 

Transport,  place  of  in  industry  127 

Trial  and  error  in  society.  .  .  .  135 

Underground    organization    of 

business    67 

Value,  new  standards  of 130 

War,  economic  causes  of 34 

War  debts   29 

War,  elimination   of    154 

World  finance,  chaos  in 29 

War,  forms  of    154 

War,  increased  cost  of 64 

War,  new  preparations  for...  35 

War,  object  of 155 

War  promises,  failure  of 13 

War-menace,  and  chaos  in  in- 
dustry     34 

Wa-ste  in  industry 32 

Wealth    concentration,    effects 

of    43 

Wealth  distribution 36 

Wealth,  distribution  of    42 


INDEX 


175 


Wealth  of  nations 

World  administration    

World  administration,  basis  of 
World  administration,  detail 

of 

World  administration,  field  of 

World  authority,  lack  of 

World  commerce,  growth  of.. 
World  common  interests  .... 
World  conflict,  sources  of....  27 

World  disillusionment   13 

Wovld   economic   organization, 

detail   of    88 

World   economic   organization, 

diagram  of    07 

World  economic  questions....  121 
World  economic  solidarity  ...  22 
World  economics  and  the 

League   23 

World  economics,  chaos  in  ...      28 
World  federation,  detail  of  or- 
ganization        113 

World  industrial  congress,  or- 
ganization of    

World  industrial  units 

World    industry,    organization 

of ". 95 

World  isolation,  passing  of .  .  .      20 
World  need  of  organization.  .    101 
World      organization,      begin- 
nings in 24. 


World  organization,  principles 
of  

World  parliament,  organiza- 
tion of  

World  organization,  problem 
of 

World  parliament,  possibili- 
ties of 

World  politics  and  the  League 

World  problems,  enumerated.  . 

World  problems,  method  of  ap- 
proach   

World  producers'  federation, 
character  of 

World  producers'  federation, 
form  of  

World  producers'  federation, 
scope  of  

World  producers'  federation, 
structure  of  

World  reconstruction,  basis  for 

World  resources,  distribution 
of  

World  thinking  and  organiza- 
tion   

World  thinking,  ba*is  for.... 

World  thinking,  economic  basis 
of  

World  wealth,  distribution  of. 

Worklizing  economic  activity. 


113 

24 

120 

23 

122 

121 
111 

107 
112 

113 
49 


20 

100 


AA      000003609    5 


